Help to Buy: Is another property bubble really a good idea?

They must have worked out that creating no extra houses will result in there not being any more houses

Share

This Government loves exciting fresh ideas, so they’ve announced an extension of their plan to boost the economy, the Help to Buy scheme that makes it easy for  people to borrow more than they can afford to buy a house, so that house prices will go up, making us all feel better off.

If only someone had tried before to inflate an economy by lending huge amounts to people to buy houses, even if they couldn’t afford it, then it might be possible to predict how this might end. Already the banks have made it clear they love the idea, and their judgement has been impeccable in recent years.

The genius of the idea, apparently, is it will solve the problem of so many young people being unable to find a place to live. Simplistic people might suggest that if there are more people than can fit in all the houses, the best solution would be to build more houses. But that’s because they’re idiots.

That way could, I suppose, result in people having a house of sorts, in which they could “live” and sleep and raise kids and that sort of nonsense. But it wouldn’t push the prices up, enabling people to sit in restaurants saying “We looked on Zoopla and our side of the street is worth 2 per cent more now than it was last Tuesday, which makes me a wonderful human being,” in which case there’s no point in  having a house in the first place.

If you find it confusing to work out whether the Government’s Help to Buy scheme will  actually help the housing situation, it might be worth reading the views of the think- tank, The  Adam Smith Institute. These are the people who delight in dreaming up  glorious free market schemes, such as  privatising the sea and charging rent to whelks, or making schizophrenics pay for their treatment by selling sponsorship to the voices in their heads. So they tell the psychiatrist: “The man in the cloak keeps telling me, ‘We buy any car, any car, we buy any car’”.

Yet even the Adam Smith Institute says the Help to Buy scheme “will only drive prices up,  making housing more unaffordable for most people.” Once the Adam Smith Institute  says something is too uncaring, that’s like  suggesting an idea to Abu Hamza and him  saying “I don’t agree with that, it’s too  extremist for me.”

As keen followers of economics, they must have worked out that creating no extra houses will result in there not being any more houses. So if more people are able to buy a house, the price of the houses that already exist must go up. But the Government seems determined  to consider any solution rather than  build them.

If the Help to Buy scheme doesn’t work, they’ll change the rules again, so the payday loan companies can give you a mortgage. You’ll be able to ring Wonga, buy a two-bedroom flat 20 minutes later, and by 5.40pm owe them 70 billion quid and get evicted, but at least you’ll have had somewhere to call your own for an hour and a half.

One clue as to whether the main objective of this scheme really is to help first-time buyers, is that the loans they plan to back up are for properties worth up to £600,000. Maybe in George Osborne’s world that makes sense, as he wants nothing more than to help young couples starting out in life, to get a foot on the property ladder with just a modest castle, until later, when thoughts of babies are in the air, when they’ll need something more substantial with an en suite airport.

Maybe other ministers have tried to explain to David Cameron the complicated mathematics around housing, looking him in the eye and saying slowly “If there are more people than fit in the houses, we need more houses”. This is possible, as he appears to have the same difficulty with the issue of jobs, believing that if there are more people than jobs, you can get everyone into work by yelling “get a job” at people without one.

This means he’d be a fascinating man to have a game of musical chairs with. After the first chair was taken away, he’d inform  everyone “I’ll make it easier for the chair  agencies to sell the chairs that are left, then there’s no reason for anyone to be left without one.” And when this still left someone  standing up he’d tell them “Well, don’t think I’m going to let you sit on the floor sponging off the rest of us. You can spend all day  looking for a chair or get out of this house.”

Perhaps the most impressive side to this strategy, of imagining the economy is on the up because house prices are being encouraged to rise, is it doesn’t ignore the lessons of old economic history, it ignores the lessons of about five years ago. Usually it’s considered polite to wait a century before repeating a  catastrophic mistake, but this lot are going for it straight away.

So we await his next scheme, a plan to boost the economy by buying an Italian ferry, calling it the Costa Concordia, and announcing “We’ve even found an ideal captain, strangely out of work this last couple of years.” This is the sort of radical fresh thinking that will confirm Britain’s recovery.

Twitter: mrmarksteel

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Office Administrator

£14000 - £18000 per annum: Recruitment Genius: An Office Administrator is requ...

Recruitment Genius: Sales Executive - Commercial Vehicles - OTE £40,000

£12000 - £40000 per annum: Recruitment Genius: Due to expansion and growth of ...

Ashdown Group: Senior PHP Developer - Sheffield - £50,000

£40000 - £50000 per annum: Ashdown Group: Senior PHP Developer position with a...

Recruitment Genius: Operations Leader - Plasma Processing

Negotiable: Recruitment Genius: An Operations Leader is required to join a lea...

Day In a Page

Read Next
 

i Editor's Letter: Most powerful woman in British politics

Oliver Duff Oliver Duff
All the major parties are under pressure from sceptical voters to spell out their tax and spending plans  

Yet again, the economy is the battleground on which the election will be fought

Patrick Diamond
Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders