Azara Blog: Campaign to control house prices

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Date published: 2005/01/25

The BBC says:

House prices should be regulated to allow more people to buy their own property, a new pressure group says.

The House Price Control campaign has been set up by Bob Goodall, who started the Save Our Building Societies group.

He wants campaigners to lobby MPs and other organisations to highlight issues such as availability and affordability.
...
Campaigner Bob Goodall argues that high house prices represent an "illusion" of wealth that result in 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 they move away," Mr Goodall explained.

The best way for raising the overall standard of living in Britain, he said, was to control the biggest financial burden in people's lives - housing.

Mr Goodall is calling on MPs and property organisations to start a debate on what measures to take to control house price inflation, using government regulation if necessary.

"Regulation is a free tool for the government that costs nothing financially," he said.

Limited supply of land and rising demand through a booming population means that prices will continue to soar, he said.

Well some of that makes sense but most of it is nonsense. How could anyone say with a straight face that "regulation is a free tool for the government that costs nothing financially"? And how would this regulation work? In the last few years house prices have risen circa 10% to 20% year on year. Let's say the regulation dictates that you cannot sell your house for more than a 5% year on year increase. What will you do? Well for one thing you will not improve your house. (And because of the huge house price increases many people recently have extended their existing house rather than move to a bigger house.) Indeed it would be worthwhile not maintaining your house and allowing it to degrade to such an extent that its real value has only gone up by 5% per annum, so you do not lose out. We could end up with a country full of semi-derelict houses. Why does the BBC run stories like this? (You can guarantee that most people sending press releases to the BBC get ignored.)

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