Tuesday, Sep 14, 2010
Ultimately everybody loses from high house prices
Telegraph: Who gets hurt by high house prices? All of us
"Ultimately everybody loses from high house prices. Here’s six different ways people lose out ... What is the government going to do about it? We need more housing. Ministers are beavering away on ways to reform the system. But so far they have been shy about setting out their ultimate goals, and we don’t know how radical they are going to be. They should shout it from the rooftops: high housing costs have hurt us all, and it’s time to put a stop to them." This article says the main cause for high housing costs is the constriction of supply. It fails to mention the role of the quantity and price of lending.
Posted by wanderinman @ 07:13 PM (1055 views) Add Comment
21 Comments
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1. mark wadsworth said...
That's a fair summary, but he missed off the biggie:
"House prices bubbles are merely the flip side of credit bubbles, which always burst in the end and cause terrible recessions."
2. Crunchy said...
All good men that really challenge the shadow governments agenda end up dead.
RIP John Smith and many others. Only the spinless remain. No change, untill cracking (hard evidence of nano thermite and implosions)
9/11 flushes some of these war mongering criminal cockroaches out to their death sentences. Their day is coming.
3. uncle tom said...
Those who were alert to the BBC's past bias might care to note how The Telegraph has started championing the opposite view..
..although we've been banging on for years about this subject, I suspect that we will have to thank David Willetts for changing the official mindset on this issue. DW is one of those rare politicians whose ability and modesty earns huge respect and attention from their parliamentary colleagues.
I await the forthcoming housing bill with great interest..
4. Sarah said...
They've started championing the opposite view because house prices have started falling. Cause and effect..
5. doomwatch said...
3 words: LAND VALUE TAX
6. str 2007 said...
I'd noticed a stream of hpc bear food articles coming from the telegraph.
Do all these make the paper or is it just online ?
7. wanderinman said...
str2007...
I've don't know which make the paper. But the proximity of the Telegraph to the Tories makes me wonder whether there's an element of expectation management going on via the press. The writer of this article is the Director of Policy Exchange which Wikipedia describes as:
"a British conservative think tank based in London. The Daily Telegraph has described it as "the largest, but also the most influential think tank on the right". The New Statesman called it as David Cameron's "favourite think tank", a view shared by the Political Editor of the Evening Standard Joe Murphy, who referred to it as "the intellectual boot camp of the Tory modernisers’"
http://en.wikipedia.org/wiki/Policy_Exchange
It counts current Cabinet Ministers Michael Gove and Francis Maude among its founders.
8. str 2007 said...
Cheers wanderinman
Well it's coming thick & fast, I see they've got onto social unrest now with an article posted above this one.
9. peter said...
Looks like a fairly standard Telegraph article on the subject:
Lobbying for the house building industry dressed up as analysis.
They want to keep the cheap money flowing while planning laws are relaxed - and hey presto: bigger profits!
We could easily have much cheaper housing, if only the government would stop interfering in financial markets via the Bank of England.
10. symo said...
Low house prices during the boom would have meant all that cash would have been invested into savings, bonds, foreign investments etc, providing UK plc a great revenue stream for the current time. However by failing to force the banks to a 3.5 times earning multiple the politicians and banks effectively bankrupted the UK.
Just think of how much money could have been saved and invested.
Oh and by the way does this article mark sentiment changing?
11. Cool_hand said...
Fails to mention that it was a credit bubble that caused high prices.
12. uncle tom said...
"Lobbying for the house building industry dressed up as analysis. "
Peter,
Stop and consider for a moment what the housebuilding industry actually wants..
The big developers are sitting on huge land banks, yet are building very few houses. Why? Because their core business moved away from creating homes, and into property speculation.
If house prices fall, their land banks get devalued, and they risk going out of business. So to try to prop the market, they are only building at tick-over levels.
The government's plans look likely to break the big developer's cartel, and they are getting very worried about that..
Their lobbyists will be working overtime to spread scare stories about concreting over the countryside - wait for the reaction after the bill is published..
13. capitalist said...
3 words:
LAND VALUE TAXInterest rate increases.14. Capitalist said...
Sorry, I intended to use strikethrough through the words "land value tax" in post 10, but the html coding didn't work.
15. uncle tom said...
3 words: WILL NEVER HAPPEN
4 more words: HUM A NEW TUNE!
16. smugdog said...
That's six words innt.
17. mark wadsworth said...
UT why wouldn't LVT happen? Why not replace the entire tax system with LVT?
Or are you deadly keen to subsidise other people's rental income, mortgage bills and house 'values' through the income tax system - the harder you work, the more other people benefit? Conversely, every penny of LVT you spend it entirely voluntary and for your own personal benefit (it's like rent - you get what you choose to pay for), and you get half of it back via citizen's income anyway.
Do you really believe that the economy would not do a lot better without income tax, VAT etc but with LVT? If so, could you explain why?
18. mark wadsworth said...
UT, comment 9.
Excellent summary of what the big housebuilders do - land value tax would sort all that out, of course. What's not to like?
19. Ftb Since 2003 said...
Bear food, bear food, bear food. Just appetisers though, still waiting for the full on main course.
(former lurker)
20. need-a-crash said...
@8. "all that cash would have been invested into savings, bonds, foreign investments etc"
Except there was no cash it was all debt! So nothing would have been invested anywhere, house prices have been the only fuel of our economic growth for the last 13yrs.
21. uncle tom said...
Oh yawn..
Mark, I think it was only yesterday that I explained the sociology of why we won't get radical tax reform, and a wealth tax also has major constitutional issues as well; - so LVT - Really Isn't going To Happen..
..do stop wittering on about it..!