The escalation of house prices is a national scandal
✒ IT is reported, in a year of economic collapse, that property prices have risen by 10.2 per cent (ONS) mainly as a result of the stamp duty holiday, a policy previously tried with similar consequences.
The biggest single scandal in my lifetime, I am now 80, has been the escalating price of housing to the current obscene levels as a direct consequence of government policies.
In 1971 Anthony Barber, Edward Heath’s Chancellor, let the money supply rip and deregulated financial markets.
The consequence was hyper inflation and a 60 per cent increase in house prices within a year.
At this time I was looking to buy my first property in London with an income of £3,000 and an average house price c£7,000. Within a year that price was £10,500 and I was priced out of the market. Years later I discovered, when the secondary banks went bust, spawned by the Chancellors, that they had been lending up to three-and-ahalf times income, which forced up prices as panic set in.
Prior to this mortgages were 90 per cent of two-and-a-half times the income of the main earner.
This occurred in the late 1970s but the deregulation of financial markets by the Thatcher government in 1986 (the Big Bang) was the real disaster for potential homeowners when reckless lending and speculation in property really took off, exacerbated by the wholesale sell-off of public housing, little of which was replaced.
We now have a desperate shortage of affordable housing and still escalating prices way beyond the means of many potential buyers and often unaffordable rents by the “haves” to the “have nots”. All this the consequence of monetary and fiscal policies by Government and the Bank of England.
The quantitative easing policies following from the 2008 crash resulted in 90 per cent of that going on property speculation rather than productive jobcreating opportunities because of the failure to define where the money should be invested and we are still paying the consequences of that and financial speculation is still rampant Why has nothing changed? Anthony Davies MSC FCCA
Cheltenham