Redwood wants high house prices
Posted by cabalamat on 2009-Jun-13
John Redwood says:
I have been a pessimist about UK commercial and residential property [...] Residential prices have also fallen.
If falling house prices are a cause for pessimism, it is implied that Redwood would like to see high house prices.
The average house price in Britain — even with the current fall in prices — is around £220,000. But there’s no reason, with modern technology, why a decent quality starter home should cost more than £20,000 to build. The interest on a mortgage of this size, at a 5% interest rate, would be 20 quid a week, well witrhin just about anyone’s pocket.
But Redwood doesn’t want affordable housing. He apparently thinks only rich people should be able to afford a house.
George Carty said
Isn’t the collapse of many company pension schemes to blame, because people are using houses as substitute pensions?
cabalamat said
Partly. But people are only investing in houses because house prices keep going up, which is because of artificial restrictions to supply.
George Carty said
Since 70% of British voters are homeowners, wouldn’t any proposed policy which would have the effect of substantially reducing house prices be political suicide?
The poster “blissex” (who has no blog of his/her own, I’m afraid) has made this point on several econ blogs (including Stumbling and Mumbling)…