This Week in Property: The Latest News (27th May 2022)
Take a look at what our CEO Gill Fielding has to say about this week’s property news…
Well Rishi Sunak and his wife Aksharta Murty have made the new Sunday Times rich list as they are worth a whopping £730 m apparently. Now that isn’t all it seems as £690 m of that is the value of Aksharta’s shares in her father’s company so in some senses that’s not ‘real’ money. However that still leaves £40 m which by any ones terms is a decent amount and many people think that makes him unsuitable to be in government as he isn’t in touch with the normal person. Well I completely disagree with that thought as I don’t want my Chancellor to be like normal people who are, in the main, poor and bad with money. I want my Chancellor to be good with money, to understand how it works and to be capable of making more, which he clearly is. It sems such a ridiculous idea that we want people for government positions who are bad at their job. It’s like advertising for a dentists job asking for someone who does their own teeth, or has rotten teeth and has no idea what they’re doing – as long as they are a ‘normal’ person. For someone to be in control of the country’s finances we need someone with experience with money and of handling it well and who cares if that skill, knowledge and experience puts him on the Rich list!
We’ve just seen Britain’s biggest lottery win – £184 million and my immediate thoughts are that I hope the people involved are OK be as winning a lot of money doesn’t always go well. Although many people handle it OK and give money away and fulfil their dreams, some people go off the rails like Michael Carroll who blew the lot and ended back on the dole and Lee Ryan who actually ended up in jail after stealing cars when the money ran out. Money can be a blessing but it can also be a curse and it’s not the money that’s the issue – it’s the people who have it or don’t that’s the challenge. If you’re good with money you’ll always be good with it and be able to handle any change in circumstances – even big ones – but sadly if you’re bad with money I don’t think any amount of lottery win will change that. I’ve seen over many years of study that giving people money doesn’t necessarily solve their money worries and it can actually make them worse. The key is to follow the 5 basic principles of money (awareness of inflows and outflows: budgeting: managing debt: understanding how money grows and taking personal control) such that you have a system to handle whatever financial situation comes your way, good or bad. And I hope the new lottery winners are already money savvy and that they cope well. I wish them luck.
It occurs to me that there are many different interpretations of the term ‘financial freedom’ and I read today about in China if you want to buy a second home, you have to have 3 children. I assume it’s to prove that you need the spare bedroom! In 13 cities people with 3 or more children are prioritised when new homes come on the market for sale. Now in the UK anyone can buy a second – or third – home or become an investor if they want and have the inclination and drive to do it. We have choice in whether we want to be rich or poor and have complete freedom as to how we spend or save or invest our money. Sometimes it takes a reminder like this current Chinese policy to remind us that not all people have choice in what they do. We are fortunate that in the UK that we have the ‘financial freedom’ to choose whether we want to be financially free or not.
70 years of perspective
With the Queens Platinum Jubilee only days away there are some fantastic pieces of reporting showing the difference between 1952 and 2022. House prices on average were £1,931 and equated to about 4 times average (male) earnings whereas now it’s £260,771 (nearly 5 times higher when figures are adjusted for inflation) and equate to 8 times average earnings. The base rate now may be 1% but in 1952 it was 4% and hose prices have fallen only twice in all that time: once in the recession of 1989 – 1995 and again in the financial crash of 2007 but property prices have always recovered and are now at their highest ever level. One of the reasons for that continued rise is the lack of building and in the early part of Queen Elizabeth’s reign we did build 300,000 – 400,000 new homes per year but sadly that number has diminished over the years to about half that and almost none of the new building is government funded in any way and local authority house building ended more or less in the early 1990’s. Much has changed over the 70 years but the continued rise of property prices – over the long term – hasn’t.
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