The politics of house prices

Friday, February 05, 2010 by Ed Mead

If I have one more person asking, with genuine interest in the answer for a change, what’s happening in the property market I’ll have to buy an even bigger megaphone and simply tell them that I’ve no idea. Whether we’re talking objective or subjective stats, expert or amateur opinion, boardroom or pub chat or as importantly, London or Country, North or South East or West we’re all just waffling.

But the amount of hot air being expelled gives the lie to how important a question it is. Of all the retrospective stats issued you can be sure that the house price indices are as closely watched by the Prime Minister as they are by any person in the street. Since the Tony and Gordon show has been running it’s been the warm  feeling of accumulating wealth via the value of your house that’s been closest to any voter’s heart and voting slip and not the myriad number of other earnestly gestated and awkwardly born policies. This may be a sad post Maggie misinterpretation of our net wealth, but it seems to be the way people are thinking.

It was a gutsy (if wrong) decision to ever start tinkering with Stamp Duty and I reckon the delicate balance has now been forever altered with volumes off a cliff and it now being cheaper to add an extension (built by Eastern European builders sending the money home) than move. Only by putting Stamp Duty back to 1% can we actually expect to see volumes rising, and people voting for whoever says they’ll do it.

It’s easy to see why London house prices have taken off again and it’s easy to see that at some point they’ll slow down again, probably when interest rates rise, but the fact is you simply can’t underestimate the spring in people’s step. It’s almost possible in a casual moment to forget the last two years ever happened.

There are many laudable cries about first time buyers and hundreds of vested interest groups leaping up and down demanding attention, but the fact is there are not enough houses for people to inhabit here and far too many people wanting to live in them, and that’s become, rightly, a political issue.

Let’s hope politicians of whatever hue remember where the engine that drives so much consumer confidence is located.