We are in the middle of a strange phenomenon. House prices have been pushed up and up. They have risen at nearly double the rate of earnings over the past 35 years. If house prices had increased at the same rate as inflation the average house would cost about £60 000, and not three times that amount.
What this means is that people, while paying off debt, have a perception of wealth. They view their lives through a veil of unreality called – house price – and fail to see clearly. That terraced ex-council house may be valued at £160 000, but it is still an ex-council house. The type of place that, 20 years ago, ordinary folk could afford to live in, pay their rent, pay their bills and stay out of debt. Now people, living in the same house, ostensibly owning it, struggle to pay the mortgage, accumulate additional debt, may be trapped in a job they don’t like, and can’t move, because it’s not that easy to sell an ex-council house.
But having been fooled into believing that because the house has a high value, people are then seduced into ‘releasing equity’, or securing other loans on the house, or taking out non-secured loans.
This in turn is fuelled by the rampant consumerism, or affluenza, that is afflicting Britain today, which is promoted by the media and by the retail industry. The plethora of TV programmes about home improvements, together with ‘buy now pay nothing for 12 months’ deals lure people to over commit financially on things that they probably don’t need. Rampant consumerism hits all areas of peoples’ lives and this, combined with an obsession with following, and copying, celebrity lifestyles further condemn people to higher and higher levels of debt. Recent reports show that many women over 35 have accumulated debts of £8,219.
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