The second most powerful man in the country misidentified his real enemy this week with his latest tirade.
Instead of wasting his breath on foreign policy, John Prescott could have looked closer to home for a chink opening up in the latest from Tory Party HQ.
For David Cameron, leader of the Conservative Party, looks to have opened up a second major front in the war on Labour by following up an earlier speech criticising the government’s response to the recent alleged terrorist plot to blow up aeroplanes with a major policy speech on plans to broaden access to home ownership.
Perhaps looking to re-capture the hearts and minds of those tempted by Thatcher’s homeowning revolution – he too used the word “revolution” - Cameron has proposed a new style of 'right-to-buy' he is calling 'rent-to-own'.
Apart from sounding like a clarion call to stampede into the - as yet - niche part of the mortgage market developed for those who are forbidden for religious reasons from being seen to pay interest (I’d recommend a read of The Merchant of Venice for a feel of how homeowners have struggled with this question through the ages), the policy fails on a basic point of economics that neither Labour nor the Tories seem able to grasp.
It is a well-known fact the UK faces a long-term and growing gap between the number of housing units required and the number of new units being built.
Kate Barker eloquently identified this gap in her report to the Treasury, since when there has been exactly nothing done to really change the situation.
Hips have come and gone, interest rates have gone down and come back, but still the gap persists, driven by the need for property developers to avoid being financially burned by building on too many of the plots on their books - as they were in the early 1990s - coupled with significant localised population spikes helped along by both continued UK internal migration and a growing EU eager to tap into higher-than-EU-average GDP growth figures.
This GDP growth, of course, helps explain why the housing market bubble has not burst, despite reports of lenders offering mortgages on multiples up to 7x income.
First-time buyers may be tempted by the Cameronian rhetoric: getting a foot on the housing ladder is often seen in this country as far more important than, say, coming out of secondary school with the ability to read and write properly.
However, the problems encountered by FTBs, and the council and housing association tenants being wooed will not go away.
The majority of easy-sell council property went long ago, meaning those units left are going to require more expensive upgrading to stay liveable in the long term.
Few, if any, councils in the past 20 years have had in place long-term construction plans resulting in the stream of additional units required to meet populations in their respective catchment areas. But then this was partly, if not wholly, because successive Conservative governments throughtout the '80s and '90s forbad local authorities from using the capital raised from the sale of council housing to build more homes.
There is the question of significant shifts in the type of units of people who would live in those units of property: more divorced families and more families with fewer children, for example.
A review of the UK housing market over the past 100 years clearly shows there have been few periods when housing demand and supply ever were relatively in balance.
Of course, it was easier in some respects: the 1930s saw a boom in surburban house construction, following railway lines out of London into previously sparsely populated areas, subject to some far less restrictive planning rules.
Arguably, however, the big post-war boom would not have been spurred without direct government decisions to get more housing put in place amid calls for everyone in the country to have the same right to basic quality of life.
Nowadays, that quality of life call has been extended by politicians of unpopular bad word with politicians) against those who are simply not earning enough to pay market prices for piles of bricks, mortar, wood and plastic.
The morals of such views are another debate entirely, but without recognition that supply and demand set prices and the UK - as yet - does not seem ready for price controls on property prices or a new way of viewing property as an asset, there seems little ground in reality to support either the government or opposition’s views.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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