Criticising the risk that houses may go up in value and also complaining about the lack of housebuilding at the same time is economically illiterate.
Look at the last 40 years of British history, house prices have gone up ridiculously and there's been a shortage of housebuilding. The idea that increased housebuilding follows price rises has been tested to destruction in this country.
Come 2008 housebuilding fell off a cliff due to a collapse in demand and it has not recovered. If you want more houses you need more demand. If you want more demand you need two things. A supply of credit and a prospect of capital appreciation. Without them housebuilding does not recover. QED.
The demand is not driven by the prospect of price inflation. Look at Germany, they build houses and income to house price ratios have remained stable. Your wish to drive up housing benefit payments is insatiable
With respect Tim that is ridiculous. Imagine you are part of a young couple starting out. Do you buy or rent? Will your house go up in value or fall into negative equity? This doesn't make a difference to your decision? When I started out in the very early 1980s the general view was that your mortgage payments went on the value of your house. Demand was very high and everyone wanted to buy.
Supply has been restricted historically in this country by our planning laws and the fact that the more popular parts of these islands are already quite crowded. That is why house inflation has sometimes been the effect of demand. But at the moment, because of the lack of development over the last few years, there is an incredible amount of land with existing PP waiting for market. I thought you had spotted that and as I have said I agree that as in the early 1930s this is a very good use of money with strong multiplier effects through the economy.
I expect we will see a surge in housebuilding (I know you love that word). The extent of it will measure the extent of Osborne's success. I am optimistic given the conditions we are currently in but the schemes have a definite shelf life as things take off more generally.
The demand is not driven by the prospect of price inflation. Look at Germany, they build houses and income to house price ratios have remained stable. Your wish to drive up housing benefit payments is insatiable
I see you're choosing to compare different property markets, the German one being geared towards renting rather than purchase. Except by evil private investors.
True but the IMF is part of a troika imposing a draconian austerity in Southern Europe, and yet the very same institution is arguing the UK's much less severe austerity is too severe.
Its a completely inconsistent position, it seems to me...
It's not inconsistent at all. The Southern European nations in question are in a single currency, which has caused them to reach the limit of their borrowing from the markets. The UK, in contrast, has its own currency, and could thus afford to borrow a lot more.
Comments
Come 2008 housebuilding fell off a cliff due to a collapse in demand and it has not recovered. If you want more houses you need more demand. If you want more demand you need two things. A supply of credit and a prospect of capital appreciation. Without them housebuilding does not recover. QED.
He has a point
Supply has been restricted historically in this country by our planning laws and the fact that the more popular parts of these islands are already quite crowded. That is why house inflation has sometimes been the effect of demand. But at the moment, because of the lack of development over the last few years, there is an incredible amount of land with existing PP waiting for market. I thought you had spotted that and as I have said I agree that as in the early 1930s this is a very good use of money with strong multiplier effects through the economy.
I expect we will see a surge in housebuilding (I know you love that word). The extent of it will measure the extent of Osborne's success. I am optimistic given the conditions we are currently in but the schemes have a definite shelf life as things take off more generally.
You still want more houses don't you?
http://www.guardian.co.uk/money/2011/mar/19/brits-buy-germans-rent