That which does not kill us makes us stronger (Friedrich Nietsche)

With ensuing inflation and an unprecedented decline in the housing market, the bleak prospect of a Recession looms ever closer. As we reach the end of a decade of decadence some economists are calling the ‘golden age’, the economic forecast looks gloomy.

In recent years homeowners have become greedy and materially affluent, naively overlooking long-term credit market trends. These greedy buy-to-let investors have accelerated the cost of rental properties dramatically over the past decade and prices are hugely inflated. After recently scrutinizing the rental market, I have come out of what appears to be its backside, convinced that the landlords have been having a private party at the public’s expense.

In Norwich, a typical one bedroom flat equates to a studio (box) room with a separate bathroom, or if you’re lucky two ‘generous’ sized rooms separated by a dud wall, each large enough to fit a single bed or an armchair and small bookcase (what else would you need?) and at £425.00 per month on average, it doesn’t come cheap.

In Brighton (in the ‘overvalued’ south) I was paying the same for a ‘bedsit’ where everything from the plumbing to the bricks and mortar was falling apart, not to mention the shared facilities, which were the subject of many dark hours spent listening sardonically to the agents (ironically) explain how the toilet and shower ‘rooms’ were cleaned regularly regardless of being so curiously dank and dirty after each (spurious) visit from the cleaning contractor.

The current rental market has been described as ‘wobbling’, with rental yields dropping by 50 percent in just a few years. However, if the housing market continues to fall at a sharp rate then landlords will be forced to increase the rent as their rental income fails to cover related mortgage repayments. If (when) tenants cannot cover these repayments landlords will be forced to sell.

'Buy to Let’ appears to be one of the factors causing increasing house costs, pricing the rest of us out of the market by forcing us to pay exorbitant rental fees: it seems to me a market adjustment is long overdue. With mortgage rates soaring, many families are finding it increasingly difficult to keep up with mounting debt, with some already facing house repossession. However, more people want house prices to rise than to fall, and that includes homeowners, who will be looking for affordable housing (to buy or rent) elsewhere.

We are currently living beyond our means, but as credit becomes harder for us to obtain we will be forced to consume less. In the West (of the world, not Britain) even the poorest of us are rich as a nation – in spite of what Britain’s environment ministers would have us believe given the £800m ‘loan’ issued ‘with interest’ to the world’s poorest countries in lieu of a sufficient aid budget - we can live on a lot less than we do.

For the past 10 years we have been a nation of consumers lead by a money-driven globalised economy. A lower level of consumption would mean that we could be released from the straightjacket of celebrity ‘culture’, superficial ideals, and material waste. Even some economists have been waxing lyrical about the potentially ‘positive’ aspect of a downturn in the economy, suggesting that the credit crunch could make us stronger as a nation. After all, there’s nothing like adversity to build character.

Faced with the current fuel crisis, a reduction in spending could mean that we get greener, curbing rising utility bills and food prices. A recession could force us to re-evaluate our priorities, and question what life is really about, resulting in the appreciation of other fundamental values, and restoring the natural rhythm of life.

Lower consumption is not consistent with a diminished appreciation of life. Our ability to transform adversity into a challenge or opportunity to improve future prospects will determine our success in life and whether or not prosperity will follow. May we commit to memory the oft-overlooked maxim coined by Benjamin Franklin: a penny saved is a penny earned.

By Amanda Carey/ MOLI