By Peter Hoskin
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the papers, this week, has been like running into a brick wall. There are just
so many stories about house prices and house-building, including:
- “House prices rose last month at their quickest pace in nearly
three years, gaining 4.6 per cent compared with a year earlier, Halifax said.” –
The Times, Tuesday
- “Industry insiders said an average home will be worth £266,708 by
the end of next year.” – Daily Express, Wednesday
- “The communities minister, Brandon Lewis, hailed figures showing
that housing starts rose to 29,510 in the second quarter of 2013 as evidence
that the market had turned the corner.” – The Guardian, Friday
common denominator between all these reports – besides the bricks and mortar –
has been the Government’s two-part Help to Buy scheme. Why is demand for houses rising?
Because of Help to Buy, say expert witnesses. Why is house-building on the up?
Because of Help to Buy (or at least the
first part of it), say ministers. Help to Buy, Help to Buy, Help to Buy.
must be a novel, probably happy, feeling for ministers. For years now, it’s
seemed as though the Bank of England has had a freehold on the economic policy
levers that actually matter. But now the Government has introduced a scheme
that is making a swift and appreciable difference. From an idea in Whitehall to
a reality on the streets – it rarely happens so directly.
that mean Help to Buy is a good thing? I’ve already detailed my
concerns about it, so suffice to say that they haven’t been allayed
by this week’s news. A government-sponsored borrowing binge remains a
government-sponsored borrowing binge, whether it succeeds on its own terms or
not. In fact, the impression of success could even be worse, as it creates a
precedent for more state involvement in the housing market in future.
of which is to say: George Osborne should make sure to do what has been promised,
and end Help to Buy in 2017. The longer it goes on, the more it’s likely to
inflate house prices, and the less it will benefit potential buyers – and that’s
before we consider worst-case scenarios to do with a build-up of overstretched,
indebted homeowners, all underwritten by the Government. Should Help to Buy feature in the Tory manifesto, it should be in the context of that 2017
deadline, not anything beyond that.
Osborne is to encourage home ownership, he would do better to look at Stamp
Duty. The Taxpayers’ Alliance recently
launched a campaign on that front, and today highlights
research which found that, during recent Stamp Duty Holidays, a one percentage-point
cut in the tax increased market activity by 20 per cent. That’s some of the intended effect of Help to Buy, but without its scarier potentialities.