My name is Gary Stevenson former trader and people's economist this is gary's economics

today we're going to talk about housing

okay so there's 5 areas we're going to cover about housing - number 1 why is it so expensive

no.2 is it gonna get more expensive no.3 how that affects people

no.4 who's winning and who's losing and no.5 what can we do about it

so we're gonna go right in with number one why is it so expensive? now a lot of people

tend to believe that the reason housing is expensive is because of the housing

planning policy in the local area - a lot of people here in London believe that

but the expensiveness of housing is not a London specific problem

so i used to work in the city with people from all over the world

people in Sydney, Australia think housing is expensive because of the local planning problems

people in New York think that, people in Los Angeles think that

people in Tokyo think that, people in Shanghai think that, people in Hong Kong think that

people in Vancouver and Toronto think that basically in all of the big cities all over the world

you know i could keep going Mumbai, Rio De Janeiro everybody thinks that housing is expensive

because of the local planning policy in that 1 city once you take a global perspective and you

realize that this is happening in most if not all of the major cities in the whole world we have to

accept that the expensiveness of housing is not because specifically of London planning policy

so it's a global issue housing globally is expensive not in all cities obviously there

are parts of the UK where housing has remained cheaper but in all the major cities it's happening

so why is this happening why is housing in major cities all over the world becoming super expensive

well to understand that we need to take one more broader step back and realize it's not

even just housing that has become expensive in that same period of time the last 13 years since

the financial crisis most stocks and shares have risen 400-500% much more even than housing

land prices have increased significantly gold price has increased significantly even bond prices

have gone up basically the price of all assets has increased significantly over that period

so when we understand this we can see that it's not actually even specific to housing

so first it's not specific to london and secondly it's not even specific to housing

what has happened is there's been a massive increase in basically all long-term assets

all over the world so why has that happened well if you watch my other video 'what is wealth'

and if you haven't watched it yet i recommend you watch it - we talk about wealth inequality

increasing significantly and what that does to the price of housing the price of stocks and shares

so basically in the last 15, 20, 30 years the period where housing has become much less affordable

we've also seen a massive increase in the share of wealth owned by the very wealthiest people

the top 0.1% the extremely wealthy families now when wealthy families own assets

that means they get a lot of income from the rest of us because all of those assets give an income

and they tend not to spend that income they tend to save that income so as inequality has increased

more and more income has gone from ordinary people to the super rich and they use that

to buy assets that means we can expect to see as wealth inequality increases a fall in the prices

of goods and services and wages because that's what ordinary people spend their money on

& an increase in the price of assets, stocks, shares, land, gold, other precious metals and importantly housing

and that's basically what we've seen as we've seen inequality, wealth inequality that is, increase

significantly we've seen a massive increase in basically the price of broadly all assets

and that's because purchasing power has moved away from ordinary people who

buy goods and services which drives your wages and towards very wealthy people who buy assets

so if that's what's happening inequality is pushing the price of assets up including

housing and goods and services down why haven't goods and services prices fallen why

haven't wages fallen well that's because there's basically two effects going on at the same time

firstly increasing inequality pushes house prices up and wages down but secondly at the

same time since 2008 central banks all over the world have been massively increasing the amount

of money in the economy they've been printing huge amounts of money pushing into the economy

i talk about this a lot more in my videos on 'Covid-19 and money printing' and when central banks print

a lot of money that pushes the price of everything up so we've got 2 things happening at the same time

on the one hand increased inequality pushes house prices up & wages down on the other hand

more money in the system pushes the price of everything up the net net balance is

wages & shop prices stay about the same and house prices and asset prices go through the roof

so the expensiveness of housing is caused by two things happening at the same time significantly

increased wealth inequality and it's important to understand we're not talking about income

inequality this is not about doctors and lawyers this is about wealth going to the super wealthy

families who own huge amounts of assets and at the same time money printing wealth inequality pushes

house prices up, money printing pushes house prices up, house price goes to the roof but at the same time

wealth inequality pushes wages down so the net effect is house prices go up and your

wages stay the same that is why housing is expensive

number two is housing going to get more expensive?

short answer yes - if you watched my videos on Covid you'll see that it has caused a massive

increase in both wealth inequality and money printing that means we can expect to see housing

get significantly more unaffordable and expensive in years ahead

now number three and number four

how does this affect you and who wins and who loses now economists who often come from rich

families that own property like to think that when house prices go up it benefits the economy

people see the house price rise they feel richer they spend more money homeowners also often

like it when they see the value of their houses go up but who loses out here? well the obvious group is

young people from poor and ordinary families right people from rich families they can often

get significant deposits from their parents but people from ordinary families when the house price

goes up and the wage doesn't it can become very difficult or even impossible to buy a property

that means much longer in rented accommodation which is expensive and if they are able to save

up a deposit then they'll have to take a much bigger mortgage which will mean higher repayment

over a longer period of time so younger people are losing the money every month because of this more

expensive house prices either through having to pay rent or having to pay a bigger mortgage

when this happens they can easily respond by thinking i've got to save up a lot more money

i'll have to spend less and that can actually damage the economy

but let's talk about older people from ordinary families who may already own their own property

right these guys often think that they're winning when house prices go up but the only way that you

can get the money from the house price going up is by selling the property now if you sell your

property and spend the money then that means you can't give your kids money to buy their property

now we've already said that when house prices go up that means kids from rich families can get

deposits from their parents but kids from ordinary families can't and that means often they can't

get property at all so if you're a parent from an ordinary family you own your own property you see

the house prices go up and you think you're richer the only way you can actually get that money is by

selling the property and that's going to mean that your kids and your grandkids will never be able

to own property at all so for ordinary families they find themselves in a bind where they feel

richer because the house price is going up but the only way for them to actually make that money is

to sell the property which will mean their kids and their grandkids will never own property again

i can see this happening with the families around me kids from richer families their parents are

able to remortgage their properties or access the stocks and shares they have to give big deposits

to their kids and help them get onto the property ladder but kids from poorer families their parents

need that money to help them get through retirement and it means that kids from richer

families win and kids from poorer families end up completely losing access to property forever so

the winners here are rich families who have a lot of property big portfolios of stocks

and shares which are also going up and the losers are ordinary families who are losing their houses

so as ordinary families lose their properties and kids from richer families able to buy them

inequality gets even worse driving house prices up further still this creates a worsening spiral

which makes housing increasingly unaffordable to ordinary people that brings us to the last thing

(No.5) how do we fix it?

okay so what do we do? this problem is caused by inequality so the only way to

fix it is by fixing inequality not by taxing ordinary working people but by taxing the super rich

the government doesn't want you to know this because it's run by people with

wealth of £100 million or even sometimes over £1 billion - these people get huge amounts of

cash flows from us ordinary people to them which they use to buy houses that our kids need and

often they do it whilst paying almost no tax this can't continue we have to end it

push for wealth taxes on super rich people, educate yourselves, watch my videos about Covid & Inequality

watch my videos about what is wealth tell your friends, tell your mum, let's make it happen