Comments on: Darling plays fast and loose with house prices http://www.johnredwoodsdiary.com/2007/10/19/darling-plays-fast-and-loose-with-house-prices/ Conservative Party Member of Parliament for Wokingham Fri, 21 Nov 2008 04:34:22 +0000 http://wordpress.org/?v=2.6.2 By: Francis Irving http://www.johnredwoodsdiary.com/2007/10/19/darling-plays-fast-and-loose-with-house-prices/#comment-8671 Francis Irving Fri, 19 Oct 2007 11:29:00 +0000 http://www.johnredwoodsdiary.com/2007/10/19/darling-plays-fast-and-loose-with-house-prices/#comment-8671 Easy answer - they should fall by 20%. That's how big the bubble is. "Goldman Sachs concludes that house prices must fall by a good 20 per cent for the historic relationship between rental yields and real interest rates to be restored." http://www.ft.com/cms/s/0/95ab36cc-72f7-11dc-b7ff-0000779fd2ac.html?nclick_check=1 Easy answer - they should fall by 20%. That’s how big the bubble is.

“Goldman Sachs concludes that house prices must fall by a good 20 per cent for the historic relationship between rental yields and real interest rates to be restored.”

http://www.ft.com/cms/s/0/95ab36cc-72f7-11dc-b7ff-0000779fd2ac.html?nclick_check=1

]]> By: Conor Mccormack http://www.johnredwoodsdiary.com/2007/10/19/darling-plays-fast-and-loose-with-house-prices/#comment-8665 Conor Mccormack Fri, 19 Oct 2007 11:13:00 +0000 http://www.johnredwoodsdiary.com/2007/10/19/darling-plays-fast-and-loose-with-house-prices/#comment-8665 Another interesting post. I do not think it appropriate for government ministers to get involved with making predictions in any market, especially housing, and especially when this particular market is fragile. A fall in house prices will also affect government takings from stamp duty (both through reduced prices and fewer sales) and the Chancellor might be making his own life harder. The regulation surrounding housebuilding is becoming increasingly complex and costly. We need a robust and pragmatic planning system but otherwise there is too much market intervention and regulation from the government and planning authorities and this is constraining the supply of homes and increasing the cost of those that are built. Another interesting post.

I do not think it appropriate for government ministers to get involved with making predictions in any market, especially housing, and especially when this particular market is fragile. A fall in house prices will also affect government takings from stamp duty (both through reduced prices and fewer sales) and the Chancellor might be making his own life harder.

The regulation surrounding housebuilding is becoming increasingly complex and costly. We need a robust and pragmatic planning system but otherwise there is too much market intervention and regulation from the government and planning authorities and this is constraining the supply of homes and increasing the cost of those that are built.

]]> By: Michael Imperi http://www.johnredwoodsdiary.com/2007/10/19/darling-plays-fast-and-loose-with-house-prices/#comment-8658 Michael Imperi Fri, 19 Oct 2007 10:25:29 +0000 http://www.johnredwoodsdiary.com/2007/10/19/darling-plays-fast-and-loose-with-house-prices/#comment-8658 The government is stuck between a rock and a hard place in regards to housing. Most of the UK growth in recent years has been fuelled artificially by the house price boom. I am afraid even a levelling of house prices may severely damage the economy "house of cards" . At the same time the house price boom has created resentment among a large percentage of the population which finds increasingly difficult to purchase a house. In order to keep these happy more houses would need to be build but of course by creating more supply house prices will level if not fall. As a result , the chancellor will try to use the usual soundbites and announcements to show that he is on top of the problem but will want to avoid any serious and detailed discussion as that would disclose the lid on a Pandora's Box which the government is desperately trying to keep shut as it would put Labours economic competence under scrutiny and unravel all their claims about no more boom and bust and the PM's taking credit for the last 10 years of growth.. The government is stuck between a rock and a hard place in regards to housing. Most of the UK growth in recent years has been fuelled artificially by the house price boom. I am afraid even a levelling of house prices may severely damage the economy “house of cards” . At the same time the house price boom has created resentment among a large percentage of the population which finds increasingly difficult to purchase a house. In order to keep these happy more houses would need to be build but of course by creating more supply house prices will level if not fall.
As a result , the chancellor will try to use the usual soundbites and announcements to show that he is on top of the problem but will want to avoid any serious and detailed discussion as that would disclose the lid on a Pandora’s Box which the government is desperately trying to keep shut as it would put Labours economic competence under scrutiny and unravel all their claims about no more boom and bust and the PM’s taking credit for the last 10 years of growth..

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