Friday, 13 September 2013

"Bank of England must guarantee a permanent house price boom, says Rics"

From the BBC:

The Bank of England should use its powers to generate house price increases of at least 5% a year - more than double the normal inflation target and nearly double annual earnings growth - to "keep the froth in" price booms, a surveyors' group says.

The Royal Institution of Chartered Surveyors (Rics) said that a less than 5% annual rise should trigger an increases in caps on how much people could borrow relative to their incomes and a corresponding reduction in deposits required.

It is not suggesting that sellers should face a minimum price they can demand when selling their homes.

The Bank said it was being vigilant and pointed out that their new Governor's record in stoking the Canadian house price boom spoke for itself.

Unearned gains in the UK housing market have picked up in recent months after a few years of flat lining during the financial crisis.

There has been considerable debate during the week about the future of the UK housing market and the limited potential for government schemes such as Help To Sell to create artificial price bubbles.

3 comments:

Ben Jamin' said...

MW,

There's a very simple imperative when it comes to Government policy regarding taxation/housing/interest rates.

Does it increase the capitalised value of the UK land monopoly?

As everyone knows, monopolies are bad. They produce deadweight costs, distort markets and push up prices for consumers.

So if the answer to any policy that might increase the capitalised value of the land monopoly is yes it does, surely the Government shouldn't be doing it?

In fact, they should, for the sake of our economy, only be enacting policy to reduce it's value.

Now why can't someone ask Osborne this simple question?

Lola said...

Thanks for doing that. I've been seething about it all day. Done my monthly bit for the EADT on it.

DBC Reed said...

Does n't do to be too flippant about this. It could be a sea change.(Hard to say : there has n't been one for comparison in fifty years since they quashed Schedule A). People are actually saying ever-increasing house prices may not be an unmitigated blessing and something should be done about them.Uncle Vince is saying mere 5% house price inflation looks too much to him.
We have the chance to bat on a favourable wicket for once and make the point that mortgage capital increases and other restrictions would decrease the flow of money for housing when what's necessary is an increase in cheap land including under existing buildings. A message of increase and plenty not austerity in the housing market as well.