Wednesday, Dec 16, 2009
Rising house prices a problem not a solution
FTAdviser: Rising house prices a problem not a solution, Treasury warned
Current rising house prices represent an economic problem for the UK and not a solution, Martin Weale, director of the National Institute of Economic and Social Research (NIESR), has warned. Fuelled by the government's quantitative easing programme, Mr Weale said he was concerned that people viewed the increasing house prices as a way out of the country's economic difficulties. However, he said that when the government stimulus is stopped, the bubble could pop once again and trigger the second dip in the recovery. Instead Mr Weale said it would be good for the economy to have a period of stagnation in the housing market.
Posted by wanderinman @ 06:44 PM (766 views) Add Comment
3 Comments
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1. Alfie said...
The problem is that there are too many greedy morons who (still) believe that house prices are going to go up and probably that the government will bail them out.
2. paul said...
That's quite simply not the way the Bank of England nor the government sees it. Regardless of the fact that the "raise house prices again" policy lever no longer works, they are still intent on reinflating the housing bubble for two reasons:
1. It's done the Bank of England very nicely in the past - they've had 10 years of putting their feet up and being lauded at dinner invites.
2. MPs, Monetary Policy Committee members, Bank of England staff, bankers and baby boomers (and every combination of the above) have done very nicely out of getting first dibs on forward policies around the property market. No reason for them to destroy their own hard work and every reason to preserve their own wealth (at the expense of all else if need be).
So, in conclusion - they didn't listen last time, they won't listen this time. Just cover your ears and find a safe corner because from here on in it'll be you against them - and they'll quite happily bankrupt the country to preserve their personal wealth.
Just like in Zimbabwe.
3. mark wadsworth said...
Well said Mr Weale, who is a moderate LVT-supporter, as it happens.