George Osborne wants house prices to remain in a bubble
THERE are bad budgets and then there are bad budgets. And this one is a true stinker in at least one respect. Osborne’s decided to try and pump up house prices. The simpleton fool:
A state-backed mortgage guarantee scheme worth £130billion will see the market flooded with 500,000 cheap loans.
The Government is to subsidise deposits and provide state backing for loans to help homebuyers get on the property ladder or move up.
But there were warnings that the scheme risks creating a house price bubble.
No, that last line is wrong, is too milquetoast.
We’re in a house price bubble. Houses are 6 and more times median incomes: this is a bubble in and of itself. What we want to be doing is pricking that bubble, bringing prices down. The best way to do this is to bring down the scarcity value of planning permission. In the south of England at least some 50% of the purchase price is not for the land nor the house: it’s for the permission to build a house on that piece of land.
Subsidising the houses that already exist just ain’t the way to bring about the desired end result. We want houses to be cheaper, not have more money chasing the same number of houses that there are.
Osborne’s simply doing entirely the wrong thing here. But then that’s what you get when you allow politicians to throw other people’s money around. They piss it away: this is true of Labour, of Tories, and if the Lib Dems ever had any real power it would be the same for them too.