What happens next?
If you lend people high multiplies of their joint earnings, you can get away with it if interest rates are very, very low. But when interest rates rise to normal levels you have a real problem.
Then stop building enough houses, so prices rise, then don’t let people have a real terms pay rise for a decade or more and you have a huge problem.
Then you can throw petrol on the fire by some really stupid scheme called “Help to buy” which does nothing but force up house prices further and makes billions for the builders and you have a crisis.
Then when it all goes south, the government is deluged with calls for tax payer funded help, on top of the billions spent stoking the market in the first place.
Whereas if you had built homes, kept down prices, banned high multiply lending and not thrown fuel on the fire; you would have a really boring, steady, cheaper housing market.
Even if lenders and government are too stupid to see this coming, the Central bank and the regulators should have easily predicted it.
The price of not building a proper property market is this, another property crash and a huge bill for tax payers.
All those endless articles in the press about positive equity “wealth” and those property programmes on TV are a sign that the UK has a huge problem.
Casino economics strikes again.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media