The BBC has published an article today about the unveiling of the costs of the Government’s Help to Buy scheme. Amongst other things, the article says:
There have been concerns the scheme could fuel a housing price bubble, but Treasury Secretary Danny Alexander told the BBC that there is no UK price boom.
Which is strange, because I reckon this is exactly what a price bubble looks like:
Thanks to the gerrymandering of interests rates and the property market under Tony Blair and Gordon Brown, and now under David Cameron, we are still in the middle of the biggest property price bubble for 80 years at least.
There are only two ways out of this.
The first is for wages to rise to make up the gap, which will take a very long time indeed at the current rate of progress.
The second way is a disastrous crash in house prices (about 45%).
Prices have been shored up to protect the banks from the consequences of a collapse in the value of their mortgage assets. That is what is shutting ordinary people out of the housing market. The banks are greedy, but not totally stupid; now they have grasped that their irresponsible lending created this house price bubble, they are very wary of making high percentage loans when they can see that prices are riding for such a huge fall.
In summary, the Government seem to be trying to con people into buying overpriced property in order to be able to pretend they are helping “hardworking people”.
And no-one is saying anything, definitely not New Labour, because that would mean admitting their policies in office were a major factor in causing this.
Perhaps if we pretend it isn’t there, it will go away?