Think industry, not property

The Help to Buy scheme has helped some young buyers, but it inflates property prices

Share

Homeowners will be cheering the news that the housing market is warming up again after years in the doldrums – outside London at least. Figures from the British Bankers’ Association yesterday showed lenders issuing mortgages at their fastest rate for more than a year. This extra finance will inevitably feed through into house prices in the coming months. That, in turn, should trigger an increase in consumer spending, as nothing makes the British feel wealthier than a rise in the theoretical value of their property.

But rising property prices, coupled with stagnant wages, only worsen the situation for the thousands of young people for whom getting a foot on the housing ladder remains an impossible dream. Even if mortgage lenders are pushing more money out of their doors to the lucky few, they are still extremely picky about whom they are willing to lend to.

Government programmes, such as the Help to Buy scheme, have gone some way towards aiding younger buyers. But for the sake of helping a few thousand get on to the ladder, they have mainly served to further inflate property prices, making it harder for everybody else.

There is a darker side yet to yesterday’s numbers. While banks have been shovelling out loans to inflate the housing bubble, their support for businesses remains dire. Over the past six months, net bank lending to British firms has shrunk by an average of £1.7bn a month. Small and medium-sized companies are where the growth is really needed to get the economy back on track. When SMEs get capital to expand, they hire more people, train more youngsters, and pay more taxes. But it is precisely these businesses that are being most starved of funding by our risk-averse banks.

Rather than diverting people’s taxes into pumping up the property bubble, George Osborne should use it to help our best entrepreneurs, in the form of further tax breaks and loans. That way we might diversify our economy away from banking and fickle house prices.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Java Developer - 1 year contract

£350 - £400 Per Day: Clearwater People Solutions Ltd: Our client based in Cent...

Junior Analyst - Graduate - 6 Month fixed term contract

£17000 - £20000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

SAS Business Analyst - Credit Risk - Retail Banking

£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

Project Manager - Pensions

£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

Day In a Page

Read Next
 

The power of anonymity lies in the freedom it grants

Boyd Tonkin
Tory whips were anxiously ringing round the “usual suspects” following Douglas Carswell's defection to Ukip  

Douglas Carswell’s defection reminds us that it's the Tories who have the most to fear from Ukip

Andrew Grice
Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone