The Resolution Foundation has said that homes across the UK have become increasingly unaffordable for struggling potential buyers. According to them the proportion of homeowners dropped from 72% in April 2003 to 58% this year in, for instance, Greater Manchester.<\/p>\n
Other parts of West Yorkshire and the West Midlands have also recorded double digit falls. The reasons why house prices have become detached from earnings are as follows:<\/p>\n
. It is true that earnings struggled to keep up with inflation from the financial crash of 2008 until only about 18 months ago. However, today private and public earnings are growing in real terms, since inflation is very low and this serves to raise the standard of living for all those who are employed.<\/p>\n
. The Help-to-Buy, NewBuy and Shared Ownership schemes have assisted a number of first time buyers to get on the property ladder, but these welcome government funded schemes are not extensive enough to cater for all applicants and are limited in scope.<\/p>\n
. Most important of all, our former esteemed Chancellor, George Osborne (now in line for a Companion of Honour as part of the ex-Prime Minister\u2019s \u2018gongs for failure\u2019 scheme), foolishly stoked up the property market (which was hitherto doing very nicely) at the lower end of the scale, across the UK in his Autumn Statement of 2014 when he revamped the Stamp Duty escalator from its former \u2018slab sided\u2019 origins and, by doing so, Tax Receipts at the lower end of the scale were greatly reduced. It was in effect an \u2018Election bribe\u2019 and I commented at the time that this would disenfranchise the first time buyer, who could not keep up with the price inflation and so it has. As part of the lose\/lose strategy that he laid down for us, he increased Stamp Duty on higher priced property (by almost 100%) and this has had a devastating effect on the market place (particularly London) where liquidity has almost dried up completely as the markets \u2018screeched to a halt\u2019.<\/p>\n
Home owners are \u2018staying put\u2019, since the cost of moving is so high, and this has deleteriously affected the builders merchants (see the parlous Travis Perkins results) and, as anticipated, is having a \u2018knock-on\u2019 effect on retail spending (see results from NEXT etc.) that will undoubtedly affect the growth of the Economy and subsequently the Treasury\u2019s Tax Receipts.<\/p>\n
House builders are building fewer homes today, the Economy is shrinking and the Treasury is losing Tax Receipts by this doomed, ill-considered, fiscal strategy, all of which could have been avoided by some deft footwork so sadly absent in Mr. Osborne\u2019s tool box. His strategy was more about \u2018shock and awe\u2019 and \u2018scaring the living daylights\u2019 out of the populace in order to bully them into voting Remain in the Referendum issue and thank goodness he was \u2018booted\u2019 out by the new Prime Minister with her \u2018new broom\u2019 strategy. Goodriddence I say!<\/p>\n
The \u2018Bank of Mum & Dad\u2019 is helping a lot of struggling first time buyers to get on to the property ladder but mortgages are harder to obtain due to the greater regulation that has been imposed on the lenders.<\/p>\n
Aspiring property owners can only continue to rent from the public\/private sectors but these have also been affected by Mr. Osborne\u2019s Buy-to-Let strategy where some former landlords are selling their properties and, therefore, the pool of available properties to rent is shrinking which is \u2018pushing up\u2019 prices in certain sectors.<\/p>\n
I predicted this \u2018double effect\u2019 18months ago and the \u2018chickens have come home to roost\u2019. This is a further illustration that we need more affordable homes and with house builders share prices being \u2018on the floor\u2019 and liquidity in the Capital plummeting, how are we to build the 200,000 homes that are desperately needed to accommodate the housing needs of this burgeoning country?<\/p>\n
We now need to look to Chancellor Hammond to \u2018re-set\u2019 some of the foolish fiscal policies of the last Conservative regime and \u2018stoke up\u2019 the entire housing sector so that everyone benefits.<\/p>\n
Commentators talk about the chasm between the rich and the poor getting bigger and yet it is only those people who do not own an asset i.e. a home, who have suffered over the last 25 years. Any person, rich or poor, who own a home of some kind have benefitted from asset inflation over these years, since as the \u2018tide comes in it lifts all boats\u2019 – not just the big ones.<\/p>\n
We need to extend schemes such as Help-to-Buy and get this country moving again. Everyone will benefit including the Treasury which need Tax Receipts badly to bring down the Budget Deficit.<\/p>\n","protected":false},"excerpt":{"rendered":"
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