Tim Almond

Martin Wolf in the FT

I have three answers to this cacophony of special pleading: first, anybody who thinks it is a duty of the state to help keep housing expensive is crazy; second, policymakers should respond only to clear market failures; and, third, with a floating exchange rate and an independent central bank, the UK can weather the storm if it keeps its head.

An inflated housing market is not a good thing, nor a bad thing. If you’re trying to get in, or move up, it’s a bad thing. If you’re selling out or moving down, it’s a good thing.

The government propping up lending will only make things worse. Propping up the supply simply means that building societies and banks will be able to lend at rates they wouldn’t be able to otherwise, so prices will be artificially inflated, so we’re just delaying a fall, and potentially putting even more people into the misery of negative equity, at risk to the country’s finances. Let the damn thing adjust, and make it as painless as possible.

h/t Mark Wadsworth 

Tags: Politics, Housing //