There is a lot in the title, but it’s all important to consider when projecting the future of the housing market.
Budgets, as we all know, are balancing acts. And at the moment all political nous is focussed at getting more vote support for the upcoming election.
The Help-to-Buy ISA is another potential £3,000 free boost to a buyer’s deposit - it will be popular.
At the same time Mr O announced £13bn of mortgage asset sales (from its acquisition of Northern Rock and Bradford and Bingley). The success of these sales needs house price support so that the value of the underlying security gives comfort to the prospective purchasers, who no doubt will leverage the purchase with cheap QE money. The Government’s vested interest in maintaining house prices is clear to see.
I often wonder if this vested interest is one of the main reasons why we are not more progressive in allocating, what would only be, a very small amount of very low standard green belt for building.
After all the price of a house, adjusted for inflation, is probably the same as it was 10 years ago as a brick is a brick and labour cost rises have been modest. It’s just that the price of land has exploded as there is not enough supply.