Shared Economy, Property Bubbles and Drama. What next?
There is no doubt in the increasing presence of the Shared Economy concept (or the eminent uberfication of products and services) in the context of home, car, pet, holiday accommodation and even lawn mower ownership. Whether you choose using Airbnb over buying a holiday home, renting a dog for a couple of weeks when feeling lonely, sharing a car with a friend rather than buying one independently, the behaviour and the monetary pattern is clear. Individual ownership is slowly dying out, because consumers see more value in the one-time experience rather than in the traditional asset pursuit.
Has Access trumped ownership?
Whether you believe that the consumer is making a conscious choice or the market is forcing itself onto the individual’s decision making, the Shared Economy is here to stay, at least until the next market revolt.
What we find interesting to explore though is how the traditional division of working, middle and upper-middle class in the UK has evolved in this context of uberfication. Whether you agree with the traditional definitions of the three class distinction or to the more recent and more sophisticated discrimination of seven classes in the UK, the notion of ownership is persistent, with renting, owning or inheriting property having a central role. So, the question is, if the middle class chooses to rent because they don’t believe in the exacerbating housing bubble or simply because they can’t afford to participate in it, how “middle” could they really be?
In the pre-election frenzy discussions on the right to buy, mansion tax, mortgage rates and buy to let, we couldn’t fail to observe that there have been various attempts to solve the wrong problem, namely offering to reduce inequality by helping individuals buy more assets. If in the past, escaping poverty and joining the middle class was seen as possible only through moving from agriculture to industrialisation, then in 21st century putting the development of the country in the hands of the hype-induced housing industry is simply irresponsible from the perspective of the state, the corporate world and the individual’s options.
The new middle class doesn’t necessarily need to own houses. We believe that most City Professionals can feel empowered by much more than the opportunity for an upward mobility, enabled entirely from asset appreciation. We also think that several centuries ago this type of value creation may have been a true driver for a certain social status, security and comfort, but today ownership is often seen rather as an unnecessary burden than a wealth creator. If Piketty’s argument that inequality will always be exacerbated by the simple law of capitalism is right, then tackling the problem through more tolerance for the consumerism-driven school of thought is not just counterproductive but bluntly misleading though quite tempting for the blissfully unaware.
If you have read some of our previous articles, it wouldn’t come as a surprise we don’t have a great faith in markets. We find them irrational, inefficient and a little over-dramatic. Whether you look at the valuations in the London housing market or the social media/tech one, what is more than noticeable is the huge bubble in which price valuations have dramatically moved away from fundamentals. The positive side though is the occasional innovative occurrence of new conceptual forms as with the Shared Economy, which sets an example that certain markets can evolve to what we consider to be a more exciting, authentic and consumerism-unfriendly place where success and self-fulfillment isn’t measured by the size of your duck house.
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