Cost of living: an endless nightmare

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Le coût de la vie au Royaume-Uni est bien connu pour être l’un des plus élevés d’Europe. Londres est également bien connue pour ses prix immobiliers exorbitants. Pourquoi les prix de l’immobilier sont-ils si élevés ?

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In Britain the cost of living, in particular the cost of housing has risen faster than wages. Wages are not keeping up with real estate prices. The figures speak for themselves: last year, wages have risen by 1% whereas property prices were up by 8,4%. To illustrate it there is an example that is puzzling: if the price of food had known the same increase as real estate since 1971, a chicken would cost £51 today!

Cost of living guide 2012

Why has housing become so expensive? Mainly because the population is growing (because of the baby-boom, immigration, the rise of life expectancy …) by 0.8% a year. But compared to this soaring demand, the supply is not growing as fast, and it is this lack of housing that drives the soaring prices of housing. And try to imagine the consequences: inequalities keep widening! The gap is not only widening between renters and rentiers, big city-dwellers and rural inhabitants, but also between small-house builders and deep-pocketed builders. Indeed, since 2008 the number of small house builders has been halved in favour of the big builders.

no new homes

But why can’t the supply be developed? Because in most places you need a permission from the local council to build. This measure, introduced since 1947, was implemented to prevent urban sprawl, which it did quite successfully. But, today, there is somehow a shortage of released land. Indeed, another reason why the housing prices have been soaring is due to the reduction of the amount of lands released in the past decades. Thus, boosting supply has become one of the government priorities, even if the reforms are still very modest. A way to encourage house-building would be to give local councils incentives to make the number of building permissions increase (by, for example, enabling them to charge house-developers much more). Of course, this is a very sensitive issue. Even the modest planning reforms introduced by the coalition are controversial and face opposition. Several examples can illustrate why local residents resent some development plans ; a concept was even invented to designate this type of opposition. It is the concept of NIMBYism, an acronym for the phrase “Not in my back yard”. The opposition of the “Nimbies” was so fierce in 2007, when a permanent terminal of the Coventry Airport was planned to be built that the UK government turned it down.

In this new era where the cost of housing becomes your biggest nightmare, here’s just a piece of advice: try to have a good station in life and if possible, have parents who are owners!

Laura LENG & Lucie WACK

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