30 June 2007

our house (In the middle of our street)

Here's a couple of links to UK opinion columns which have both attracted substantial comment.

Marina Prior in the Guardian pens one of the most arch, snarky columns I've ever read, about former PM Blair's appointment as a special envoy to the Middle east. The commentary mainly lines up behind her but amongst the dissenters, there's a couple of quite moderate, thoughtful suggestions. Columns written in such a style can be immensely rewarding to read, especially if you happen to agree with the particular proposition. Whether they advance the cause of human understanding is probably another thing altogether. It's more about entertainment - and, by extension, the inevitable decline of western civilisation, I imagine. Not the news, the whole news, and nothing but, etc etc.

second column is about house prices in the UK and resultant greater inability of people to enter the housing market. As is the case in Australia there seems to be a number of market-distorting factors at play. Without doing the research, it seems that a mechanism to reduce tax for those who "buy-to-let" is acting similarly to the CGT reduction available in Australia which makes owning a house for investment purposes more attractive, given that the actual ROI is pretty low - about 3% on average, I think I've read. This column attracted an enormous number of commenters, again across a wide range of views and the argument is, by and large, very civilised (there's a few digs at socialists, not surprising given it is the Guardian again, and a tinge of racism rears its head).

The issue that I think is hardest to get around is the desirability of owning your own home. As housing affordability for first home buyers has fallen in Australia, the received wisdom seems to have been that because shares have shown greater returns over the last 20 or so years - ie since more deregulation of the finance industry combined with continued economic growth - so owning your home is not a sensible economic decision, and so you should rent and buy shares with the savings.

Seems to me that returns from shares will, over time, trend back and also generally, people don't understand the share market as well as they do housing (note this is not a claim that people understand the housing market as well as they think they do). You also have to have the self-control to actually invest in shares, which I think would be harder to achieve than making the mortgage payments.

Of course this argument also ignores the non-economic, but cultural, desire to own your castle. Which means a lot to people, even in the face of conflicting evidence. And all of a sudden, we find ourselves debating whether people are rational actors in relation to their saving and spending decisions.

Well, they may not be rational in their own dealings but they can certainly recognise
other people being a little bit too rational.

Tonight's picture is again from our time in Pakistan. It being so long ago I'm not completely certain of details, but I think this would have been taken up around the Swat Valley where we went a couple of times, rising life and limb by piloting the Mini up the Grand Trunk road to Peshawar and then turning right to go up into the hills. We never made the trip to Gilgit by plane that many did - the plane would often leave from Islamabad in the hope that Gilgit was clear - it frequently wasn't and so they often returned disappointed.

1 comment:

R.H. said...

I'll always be grateful to Peshawar. Its Lady Reading Hospital with no airconditioning and bare concrete floors saved my life. I'd arrived there at night, after a bumpy ride down the Kyber in an old bus. And the funny thing is the nurses seemed to speak English but the doctors didn't. Well they couldn't understand me, but thought I was a card all the same. In fact, white foreigners copping dysentry was a big laugh anyway. They put me on the drip, and I got a compete overhaul, what a relief. Just having the energy to walk around was marvellous. But when I went to pay they looked at me funny. "This is a free hospital," they told me. Golly, what a surprise. And so I made a donation, a small one -having (to my disgust) become as stingy as any middle class backpacker from whom I learned thrift. That's the value of travel, it shames you.

(Or should.)

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