Maybe the FT does understand economics?

Rabid EU-phile (but otherwise nice enough chap) Wolfgang Münchau hits the nail on the head here.

His article boils down to two simple facts:
1) Credit bubble = asset price bubble (in this case, house prices).
2) Once one bubble bursts, the other goes with it.

Rather than interfering in banking regulations to prevent 'reckless' lending (which never works, law of unintended consequences and all that), or telling local councils to grant more planning permission than local residents want, the simple solution to all this is an annual Land Value Tax (to replace and reduce other taxes, of course, make up your own list of priorities) that goes up when land values go up. This will act like a much higher interest rate on land values, i.e. will keep land values and house prices low and stable.

And yes, pensioners should be able to defer paying it (yawn) and it will be payable by freeholder not tenant (and unlike most taxes, very of little of it can be passed on via higher rents, this is an observable fact, yawn).