The 5 Year House Price Freeze Idea – How Stupid Is That?

by Mark Alexander

9:58 AM, 12th July 2018
About 2 months ago

The 5 Year House Price Freeze Idea – How Stupid Is That?

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The 5 Year House Price Freeze Idea – How Stupid Is That?

A “think tank” called The Institute for Public Policy Research has said that Britain needed to “reset” the way it thinks about rising prices to break the “cycle of ever-rising house prices that drives property speculation”, which it argues crowds out investment in the “real economy”.

How stupid is that?

I can only assume the think tank consisted of primary school children who haven’t even heard of economics.

Common sense dictates that something is only ever worth what somebody else is prepared to pay for it.

Let’s say I own a property which is worth £300,000 today. If I don’t maintain it and allow it to fall into a complete state of disrepair, how can I reasonably expect somebody to pay that amount of money for it in a few years time?

Looking at it another way, can a person be compelled to sell a property in years to come for what they paid for it today, regardless of condition demand?

Of course not!

In my opinion, the reality is that a house price freeze would kill the UK housing market stone dead. New mortgage lending would dry up, estate agents, conveyancers and mortgage brokers would all fold and unemployment figures would sky-rocket.

I could rant about this all day long, but instead I will leave it to you to post your own comments.



Comments

Gwen Davies

10:09 AM, 12th July 2018
About 2 months ago

Did George Osborne come up with this idea? Or is there another person who knows nothing about economics?

AA

11:39 AM, 12th July 2018
About 2 months ago

How can you freeze house prices . Firstly the treasury would lose out, secondly all people would do is something like pay the frozen price for the house and pay 50k for the old settee that will be / is to left in the house. . The position would be the IKEA unit looked like a Chippendale Antique 😊

steve p

19:21 PM, 12th July 2018
About 2 months ago

I think they are giving it as a target to the BoE, im not quite sure how they will have the tools to do that, apart from raising interest rates forcing repossessions through the roof and threatening destroying the economy... I guess it makes a change than just blaming landlords.

AA

22:24 PM, 12th July 2018
About 2 months ago

Interest rates don't just affect house price issues. They affect investment, inflation, productivity , consumption, money supply, inertia of money supply and all the fancy economic jargon that goes around...,in a nutshell a pretty blunt tool. I really don't think our government is that thick to turn up to carry out an unnecessary surgical procedure with a bag of plumbers tools. But who can tell with this crowd, and the crowd to follow thereafter. Maybe we should just go back to living in caves

Mark Alexander

10:13 AM, 13th July 2018
About 2 months ago

A few further thoughts.

If house prices are to be capped, will the price of land, building materials and contractors wages also be capped?

If not, will developers continue to build if their profit margins are reducing?

How does any of this help to solve the housing crisis?

Rob Crawford

11:02 AM, 13th July 2018
About 2 months ago

Reply to the comment left by Mark Alexander at 13/07/2018 - 10:13
The study / research (whatever you would like to call it), implies that wages will continue to increase over the five year period. Thus making houses more affordable over the five years. So, the question is, with this continued increase in building overhead, are builders prepared to take a loss on their business? Of course not!! For this reason alone, the new housing market will collapse.

Sam Addison

11:43 AM, 13th July 2018
About 2 months ago

Totally idiotic idea! The way to stop house price inflation is to build lots more houses. Simple supply and demand.
If there is not enough profit for builders spec housing it will need to be done by government - either local or national.

Laura Delow

13:55 PM, 13th July 2018
About 2 months ago

Here's the link to read this paper by the IPPR; On Borrowed time which you can read online or download a PDF version.
Just skim read it & will read in depth another day, especially Section 5 re their Recommendations.
https://www.ippr.org/research/publications/on-borrowed-time

Steve Clark

16:00 PM, 13th July 2018
About 2 months ago

What a ridiculous idea, this is the kind of strategy that will skew the market dramatically as we reach the point where the 5 year period is up!
It will actually create bigger peaks and troughs in the market depending on where in the 5 year cycle we are!

Michael Barnes

21:26 PM, 13th July 2018
About 2 months ago

Reply to the comment left by Steve Clark at 13/07/2018 - 16:00
The idea is that financial controls are put in place to prevent house price growth for 5 years, then relaxed so it tracks inflation, NOT that it is imposed by law.

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