I think this is a great primer on the housing market.
I cannot say I agree with all his solutions but the author, Larry Elliott, makes some great points which all too often are simply overlooked.
1. Help to Buy does nothing to ease the housing crisis. All it does is push up the prices of existing housing stock eg making the situation even worse. Does it add one more house to the housing supply? No.
Despite this Philip Hammond has just announced a further whopping £10bn injection.
2. "The monetary stimulus provided by the Bank of England – ultra-low interest rates and quantitative easing – has put a rocket under prices..."
100% correct. Another idiot policy by our law makers. Of course, the Government is determined to keep rates low so it can keep it's repayments on its account deficit manageable - high house prices is an unfortunate side effect.
3. Need to relax planning - we all know this.
So what are the answers?
One curious thing about the housing market is that it is not really a market at all, at least not in the classic sense. As every student learns on their first day of economics, markets work through the law of supply and demand. Low prices act as a disincentive to produce but as prices rise so supply increases. Conversely, demand falls as prices rise because buyers consider products too expensive. There is a point where there is neither too little nor too much supply, but just the right amount to satisfy demand. This is not what tends to happen. Homeowners hold on to their homes because they assume that their property will continue to go up in price. Nor do rising prices dampen demand. Rather, people think they had better scramble on to the ladder before it is too late.