After the credit crunch and before Mark Carney became Governor of the Bank of England I was sent to Canada to report on an intriguing issue. It is normally difficult to get a cigarette paper between the US and Canadian economies and yet when the US banking system imploded because of a criminally negligent mortgage policy, Canada was untouched.
The reasons why were simple. First, in Canada banking was seen as a boring job, as it should be. Lending money to other people to do things with should be boring and conservative, not a licence to make yourself a multi millionaire. Secondly, the Canadian government targeted house prices, if they rose so did interest rates or more importantly so did the deposit required and the multiple of earnings you could borrow fell.
House price inflation was unknown and people did not feel a desperate need to buy a house at any cost to get on the ladder and make money. New Zealand is apparently planning a similar policy, if only the UK was as sensible. But instead the Government in a time of ultra-low interest rates has suspended stamp duty and is now subsidising deposits with other (often poorer) tax payers’ money. Both just force up house prices making the wealthy richer and the poorer less and less capable of owning a home, which is why home ownership is falling not rising. If the money is available it should be used to build more houses, which are needed and would also help bring down housing costs.
The distorting effects on the UK economy are huge, including on productivity, investment decisions and wealth creation, with house price bubbles often leading to recessions. When you can make more from your home than your job there is something very wrong with the economy.
https://jonty.substack.com/
"When you can make more from your home than your job there is something wrong with the economy." Depends on your job and your home and the economy. It's an old cliche / adage which is reasonable but not unbeatable. You can buy your home in one market make changes and then sell into another where you can make it more desirable and therefore greater profits I see nothing wrong with a home entrepreneurial spirit. It could be the world doesn't see that you are a capable person through not having enough good examination results and yet in building, buying and selling houses you have found your niche. I don't subscribe to know your place capitalism, peasants can do well if given a chance. Maybe the problem is the class structure and /or meritocracy?