Inflation loses elections for incumbents is an oft-stated remark – see the BBC, The Conversation or NPR for a couple of quick examples of this phenomenon, except that dislike of inflation isn’t universally true. When inflation applies to food or energy bills it’s an issue and politicians will look to take action but when it comes to property prices people, or homeowners at least, want to see house prices keep on rising. That tension has an impact when it comes to trying to get people to repair or improve their homes.
People in the UK can be focused upon house prices, and the potential for price rises are often offered up a reason why people are likely to be interested in things that will improve their homes, and therefore the price of their home. However, that ignores the fact that the main reason house prices have risen isn’t because – at an aggregated level at least – people are strategic genuises that know how to invest in a savvy way – it’s largely because of house price inflation. That inflation is driven by various structural factors such as a constrained supply of properties and factors that make living in areas where property is relatively more available and affordable unappealing typically because there are less job opportunities or amenities.
Tom Slater’s (2018) article references work by (Carylon, 2013) to make the point that ‘if food prices had risen [at] the same rate as house prices since 1971, a fresh chicken would cost over £50’ – and would no doubt be much more if it was brought up to 2026 prices. If food or indeed energy prices had risen at the same rate, it is hard to imagine politicians would not only be sanguine but would continue to develop policy interventions which served to further increase prices – as the Your First Home scheme launched by the government is likely to do, just as predecessors have. Even the government’s own evaluation of an earlier iteration ‘Help to Buy’, found the scheme had little impact on increasing the supply of new homes but did find evidence of a premium of c.1%. The London School of Economics (2020) found that the scheme ‘led to bunching of newly built units below the price threshold, building of smaller new units and an improvement in the financial performance of developers’.
It’s also the case that there can be a reluctance to invest lest it leads to something which makes the property worse or makes it hard to sell. If people are unsure what the ‘right’ thing to do is then they might decide it’s less risky, and better for the value of their property and therefore their financial position to not do something. And given the retrofit sector hasn’t been able to define a clear end state for properties and therefore what ‘good’ looks like, or consistently deliver, that’s understandable.
This means that people can sit in their homes and not really have financial drivers to invest, yet still have the expectation that their home will at least maintain its value or increase. So a factor which might seem to point to a willingness to invest could actually act as a detractor to investment. In trying to understand the ecosystem in which people are making decisions about their homes, that idea of factors as potentially neutral and able to manifest as positive or negative depending upon other circumstances is an approach I’m exploring when framing the literature and looking to understand how the ecosystem works in practice.
