Q: You are in opposition, and can score an open goal by pointing out that the present gummint has allowed house prices to be inflated beyond anybody's wildest imagination. Do you:
A: Score that open goal; and suggest measures that will ensure more efficient use of available housing, for example introducing Land Value Tax (to replace Council tax, Business Rates, SDLT, IHT etc, you all know the list) ensuring that people who 'overoccupy' trade down in favour of young families and that more empty homes come on the market (whether to buy or rent), thus keeping house prices low and stable in future.
B: Waffle on about cutting Stamp Duty, a measure which would merely inflate the prices that FTBs have to pay (thus primarily benefitting sellers, not buyers)?
Follow up Q: You are an economics professor at a leading English university. The credit bubble (which inflated a corresponding house price bubble, making homes unaffordable for young couples who want to settle down and start a family) is now bursting, and house prices are coming down. Although prices have not yet fallen to their long-run 'affordable' equlibrium, they are certainly heading that way. Do you:
A: Welcome the developments, and advise young couples to postpone their first purchase for another year or two?
B: warn of 'a severe downturn' unless mortgages [are] made more easily available again?
Wednesday, 4 June 2008
Economic illiterate of the day (3)
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1 comments:
(A) both times, obviously. First Q - A, because there are too many old people rattling around in houses that are too big for them and which they can't afford to maintain properly. If it wasn't for council tax rebates for single occupants, plus various social services helping sustain them in these otherwise unviable conditions, there might not be a housing shortgage at all.
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