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Realistbear

Gordon May Have Planned H P I Since 1997

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http://www.telegraph.co.uk/money/main.jhtm...5/ccliam115.xml

If spin alone could build a house we'd be home and dry

By Liam Halligan, Economics Editor, Sunday Telegraph
Last Updated: 1:26am BST 15/07/2007
We Brits are fascinated by house prices. So, periodically, every self-respecting economics columnist has to respond to this national obsession.
Castles made of sand?
Now is a good time - not least because the signals are mixed. And with interest rates up five times in 11 months - and more rises forecast - our house-price fixation is fast approaching neurosis.
...../
Beyond the verbiage, let's have a look at Brown's record - given that even back in in 1997, he was calling for an expansion in the housing supply. By 2001, only 162,000 homes were completed - the lowest figure since 1924. The figure has grown since, but reached only 175,000 last year.
Over the same period, the demand for new houses, as measured by the number of new households, grew by an average of at least 250,000 a year. The real figure could be much higher - given the patchiness of our immigration data. That is why prices have surged so much, and beyond the reach of countless youngsters.
So what of the future? Brown's triumphant headline numbers imply house building will grow at 3.7 per cent per annum over the coming years. That's actually below than the current rate of growth. And I predict house-building will indeed slow over the foreseeable future. The reason is basic politics. The rate at which houses are built is closely connected to the granting of planning permission. Brown claims such permission will now be granted faster.
Really? Labour and the Tories are now locked in a battle for the centre ground of British politics. So is the Prime Minister really going to risk annoying all those "swing voters" in the semi-rural, edge-of-town seats which, while ripe for property development, will in fact decide the next general election?
I think not. And that's the main reason why the growth of house prices, while slowing down, will stay quite firm. There'll be no crash - just more spin from Brown, and more misery for first-time buyers.

If, which sounds credible, Brown deliberately engineered the boom the liklihood of him building homes at a faster rate does appear remote. After all, he promised only a boom and not a bust when he ascended to power. HPI was the foundation of his miracle economics. How to stimulate and keep stimulated an economy that was failing to produce anything and which was losing its chief export-NS Oil? Debt, loads of debt courtesy of the Yen. By spinning the plates forever he thought he could put off the day when all of that debt becomes a reality and the price of the homes that caused it become just illusion (Merv).

I have to disagree with the final paragraph however as so many economists make this same mistake. All bubbles burst because of one single factor: affordability. Demand is no substitute for an inability to pay or we would all be driving our fantasy cars and we would all be living in 7 bedroom mansions with a Mercedes and room for a pony or two.

The bond markets and their reaction to risk will make sure that the cycle is maintained: boom and bust. We have just had the boom.

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I heard him yesterday do a speech on BBC News24 about traveling the length and breath of the country and seeing hope and despair amongst couples struggling to buy and own their first home, now that would have been fine to state that if he was a new prime minister coming fresh to the job after winning an election from the Conservatives, but unfortunately its all his doing, I'm surprised no one in the crowd didn't shout but its all your doing you ***ck. :angry:

Edited by Jimmy2Times

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I heard him yesterday do a speech on BBC News24 about traveling the length and breath of the country and seeing hope and despair amongst couples struggling to buy and own their first home, now that would have been fine to state that if he was a new prime minister coming fresh to the job after winning an election from the Conservatives, but unfortunately its all his doing, I'm surprised no one in the crown didn't shout but its all your doing you ***ck. :angry:

Yes indeed. Its a bit like having Adolf Eichman touring the concentration camps to hand out a bar of chocolate to the victims of his own policies. The word "hypocrisy" does not even begin to describe this man's arrogance.

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I'm surprised no one in the crowd didn't shout but its all your doing you ***ck. :angry:

The language he now sprouts is similar to what he said when he was chief money spender.

It's the language of spend spend spend but with little detail about who will pick up the tab or how the government can afford it.

I want to build..........

I think the country should afford.......

The UK tax payer will get another shafting.

Edited by expatowner

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it's appears from recent polls that the majority can't associate the housing situation with the party that effectively supported it for last 10 years with their immigration and planning policies

ffs when the polls we taken a couple of months ago they we losing to the tories - WHAT has really changed since then - a few 'promises'?...

Edited by dnd

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