First an overview of last night’s leaders’ debate and that will lead into why I say house prices are set to stay relatively high.
The last leaders’ debate went pretty much as expected last night. Each protagonist was slicker, more relaxed and much more ready to attack the opposition.
But how did they fare overall?
Gordon Brown came third. He looked like he had been asked to talk to the people, so that’s what he did do, he talked to the people.
Nick Clegg came second but ran David Cameron a very close race. Nick though did something the other two did not. He fully engaged with the audience and the camera. He did not talk at them, he talked to them.
For me Cameron won. Why? Because he was for me at least one step ahead of the other two. But this was also his weakness. For example, Gordon Brown kept on about the Tories plan to ‘take Â£6 billion out of the economy’. Cameron’s replies cleverly hinted at, but did not say simply enough, that the Tory plans do not destroy Â£6 billion they just leave it in the hands of the people to spend in the shops, not given to the government to squander away.
One telling question put to the trio last night was by Anna Haywood.
She asked “I am married, my husband is an accountant and we have two children. We work really hard and between us we have a good joint wage and between us. Yet still we cannot afford a family home nor the large deposit necessary these days. What will your party do to to help families and others in terms of housing because, if a chartered accountant is priced out of the market what hope is there for anyone else?”
None of the leaders’ responses answered this question.
David Cameron talked about cutting government spending to keep taxes down and setting stamp duty at zero for house purchases under Â£250,000. Both these are mere pittances when purchasing houses at multiples of ten when compared to the real average wage, especially when we know taxes are going to have to go up. He did mention building more houses but only as far as easing planning regulations. Shared equity was also one of his favoured options, buy part and rent part of your house, a strategy that keeps house prices high.
Nick Clegg pointed out that there are some five million people requiring affordable housing. His reply was to advocate the conversion of 250,000 old, empty boarded up housing. Housing that no-one wanted in the first place. Housing that is most likely empty because there are no jobs in the area etc. He also wants to allow councils to borrow to build. Lastly he wants to convert all the recently built one person flats converted into two person or family accommodation. Who pays? But also who buys and with what? Then of course he also wants to slap VAT on new homes.
According to Gordon Brown the ‘house building industry has not served us well in this country’. They did not, according to him, have enough capital to survive the downturn. It was therefore their fault even though no-one else, even Gordon Brown didn’t see the downturn coming. So why I ask should they set capital aside if UK plc didn’t? He then proudly claimed that there are now one million more home-owners in the country than there were ten years ago, but didn’t say how many are now in difficulty and on the verge of losing them. Then came the shared equity option again. He then went on to say that we need to make the banks lend again, funny but wasn’t that what got us here in the first place? Then the aspiration that he wants the majority of people to own their own home.
None of them admitted that house prices are far too high and must fall substantially for the market to return to any sort of normality. To a position where the average person can save up a sufficient deposit in a reasonable time and then get a mortgage at reasonable rates and own their own house fully in 25 years.
For all of them it was about government intervention forcing local government, banks and builders to do things that do not make business sense. If these things made business sense businesses would be doing them now. And if they do not make business sense then the businesses involved will lose money.
I saw nothing in their answers last night that addresses the fundamental problem that house prices are too high. If anything their strategies will maintain that position.