Sunday, May 04, 2008

Hasn't Brown learned that using rising house prices is an illusion?

According to to today's Telegraph Brown is going to make a few eye catching policies to resurrect his fortunes. One of those will be:

A big expansion of shared-equity deals in a move to attract more first-time buyers back to the struggling housing market. The range of organisations that can "share" mortgages with homeowners, currently restricted to the Government, housing associations and estate agents, will be expanded to include other businesses. This is expected to give the market a big cash injection.

All this will do is keep prices artificially high. FFS, haven't our politicians learned that rising house prices as a proxy for wealth is nothing more than an illusion that eventually leads to tears? If Brown really had balls he would take the pain and let house prices slide to the point where they become truly affordable to first time buyers. Only then can we start to think about growing real wealth.

Sadly Brown doesn't have the courage of those he writes about; sadly I suspect very few politicians would when it comes to housing.


Mark Wadsworth said...

"haven't our politicians learned that rising house prices as a proxy for wealth is nothing more than an illusion"

It's not just politicians though, is it? I don't think politicians care one way or another, the problem is that The People somehow believe that rising house prices are a proxy for total wealth, they are not of course if we are in a bubble situation, which we have been since about 2000 at the latest.

If The People finally woke up to this fact, then maybe The Politicians would do something about it, like introducing Property Bubble Tax...?

The Great Simpleton said...

Fair point, but aren't our politicians suposed to tell us these things and provide "leadership"?

Mark Wadsworth said...

Politicians will go along with this lie for ever, as there is a "first-mover-disadvantage".

Whichever party recommends PBT first will be shouted down by the others. It's like fund managers - they'd rather go along with the herd and be wrong than swim against the tide and be right (to mix a metaphor).