Although interest rates may have come
down from the levels a few years ago the downside economically is
that cheaper money fuels demands which pushes up prices and people
can be back to square one so perhaps we need to look at the macro
side of things, how the market works as a whole and what can be done
to make things better? We want to start a debate rather than
prescribe any particular way of regulating the market.
I am writing to ask if you might
consider supporting the campaign. Might I also ask if it would be
possible to copy this to people you know who might wish to be
Subject :As news
reports stream in of house prices climbing beyond the reach of
ordinary people a new personal finance campaign is launched today
intended to influence the House Price debate.
The coordinator will be Bob Goodall who
ran Save Our Building Societies and was national campaign worker and
press officer for the 1997 tactical voting campaigns.
objective of the group will be very modest and attainable. It will
be solely to put on the national news and political agenda that we
need to regulate the house price mechanism rather than prescribe a
particular way of doing it. It is to start a debate on what we might
do to reduce house price inflation rather than increasing supply of
housing to meet ever increasing demand.
How the campaign will
Bob will write to supporters of the
Save Our Building Societies campaign and other campaigns he has
coordinated. Bob says "It will be like throwing a stone into a
pond and watching the ripples spread outwards". National and
local media will be key to the success of the campaign.
He says "I think it is an idea that will
appeal to people across the country. I really do not think it
carries political risks for any MPs supporting the campaign as it
merely suggests we need to look at it rather than advocate any
Bob continues " I feel very strongly
that I can sell the idea to people who may feel they have something
to lose. No one benefits from house price inflation. High house
prices is an illusion of wealth that means higher costs such as
insurance. A person only realises the wealth if they sell their home
then the 'wealth' is gone when they buy another one unless thet move
away. The house price bubble has spread out so it is harder to
capitalise in this way.
Also a home owners children or wider
family are affected by high house prices. They may need to move away
from their parents to buy a home. Additionally public services in
areas with high house prices (where there may be the biggest vested
interest against the idea of regulating the market) can be poorer
than elsewhere because the workers may find it harder to live in the
area. The way round this is not to raid other countries of their key
workers. Anyhow such workers will also move to cheaper areas as soon
as they can.
Also House price inflation
undermines our economic performance and the competiveness of
business in the global market place. House price
inflation reduces the standard of living of people because they have
to find more to pay for a home. They can also afford to buy less
goods that dents demand for products.
He says "I think this can all be turned
around. Regulation is a free tool for the government that
costs nothing financially".
"The price mechanism means that with
limited supply of land and increasing demand through rising
population or because people wish to live on their own the cost of
houses will continue to rise. With one hand people work
to raise their standard of living but lose with the other as the
cost of finding a home increases. Also if people earn more and
perhaps both partners work demand push increases and so do prices
and people are back where they started."
"Also if we would like children to
support their parents more in later life rather than rely totally on
the state it becomes harder if children are forced to move away to
be able to afford a home.
The best way of ratcheting up the
standard of living of people in this country is to regulate the
biggest cost in their lives -housing."
"Our nations competiveness
in the global marketplace would be improved if people could be as
well off or better than they are now but need to receive lower
increases in salary to achieve this. ie to meet their costs."
(One example The NHS I believe has boosted our standard of
living by providing cheaper medical service than one that people
would otherwise have to pay for privately)
"It is not about taking anything
away from people merely regulating the future market through any
number of ways. I do not wish to push for any particular only for
a national consensus to be reached that we need to do this in some
way, the alternative been to concrete over larges areas of our
I am absolutely convinced as I was with
the Save our building Societies campaign that it is a campaign
waiting to be fought.
"We protected cheaper mortgages through
the Save our Building Societies campaign but to bring home the full
benefit of this to the consumer perhaps we need to ensure that the
cheaper money does not serve only to increase demand thus push
prices up and negate the saving."
A related issue for the
We also need to return to rent control.
The housing benefit bill has gone up 4 fold to over £11 billion a
year and a vast industry has grown up exploiting those who cannot
afford a home of their own often at the expense of the taxpayer.
Unfortunately housing assocations have been involved in this. A huge
poverty trap has been created where people are financially worse off
not working. The other nasty side to it is that rents have been
greatly inflated by the housing benefit available. This has meant
that people working have to pay far higher rents because the state
has pushed up rent levels.