When reviewing David Boyle’s excellent Broke: Who Killed the Middle Class, I mentioned the simple but unpopular answer to rising property prices meaning people can no longer afford the sort of properties their parents could – move to a cheaper part of the country:
Moving from, say, Croydon to Northern Ireland would be a massive leap, but I do wonder how much of the death of the middle classes Boyle talks about is really a southern England question that can be put down to many in the middle classes preferring class death where they live to prospering elsewhere. A fair choice for anyone to make, but also rather less of a tragedy.
House prices in Northern Ireland have been jaw droppingly bad (or good, depending on whether you are a buyer or seller), with big sustained declines in recent years. Places like Hartlepool have had such depressed property markets that large numbers of houses have been empty for long periods.
Which makes this week’s Stumbling and Mumbling blog post on why more people don’t move very relevant:
You can rent a four-bed house in Leicester (say) for the price of a one-bed flat in Hackney.
And of course, it’s not just renters who have an incentive to move. For the price of a one-bed flat in London, you can get a detached house here in Rutland plus a few hundred thousand pounds in change. I know – I did.
[However] Latest figures show that, in the year to June 2012, a net 51,700 people moved out of London into the regions. This is only 0.6% of London’s population. Which seems to me to be a tiny number in light of the massive house price gap.
Why so few? Because of the power of local ties:
I suspect a big part of the answer lies in a preference for familiarity. We know that ambiguity aversion can be a powerful force in economics, and it’s close cousin, the home bias, can cause people to buy disproportionate quantities of local goods and assets. Perhaps the same thing is keeping Londoners in London – an aversion to change. (You could, of course, put a positive spin on this by calling it a preference for the social capital of one’s friends.)
In this respect, of course, British culture is very different from, say, the US’s. In the latter, there’s a long history – captured in song and literature – of people moving hundreds of miles. Here, there isn’t. The upshot is that people are slow to respond to the signals being sent by the housing market.
In fact, I think the power is every more powerful, because elsewhere the post claims that someone doing a job such as writing can easily move to work elsewhere. However that often isn’t the case – because just as networks of easily available family and friends childcare support can keep people from moving, so too can the networks of contacts that make for a more successful professional live (and of course also a happy social one).