Housing minister Grant Shapps wants to unlock the door that has slammed shut on first-time buyers.
He said it was “crazy” to see unaffordable house prices as normal and called for a new era of long-term house price stability.
At least, we think that’s what he said, as it was difficult for him to get a word in edgeways on Today, when Evan Davis conducted what is apparently still known as an interview, even though it’s long ceased to be a two-way process on that programme.
But few people would oppose Shapps’s view that it’s wrong for house prices to rise threefold in a single decade, as they did between 1997 and 2007.
According to Shapps, people should start looking at property as a home, not an investment: “The main thing everyone requires for their subsistence is a roof over their head, and when that basic human need becomes too expensive for average citizens to afford, something is out of kilter.
“I think the answer is house price stability.”He suggested (though it was hard to know with Evan Davis shouting over all the answers) that such stability might involve pay going up 4% annually but house prices rising only 2%.
Successive governments of different colours have had no answer to boom-bust cycles.
That’s probably because they don’t have a clue about the housing market and how estate agency works. (Remember a previous housing minister, Labour as it happens, who was absolutely flummoxed to be told that agents only got their fee when the place was sold?)
Various governments have played around with the edges of the housing market. They’ve introduced HIPs, backed away from regulating agents, and toyed with the idea of making gazumping illegal, although they’ve never seemed as keen on stamping out gazundering.
Shapps seems to think that putting an end to boom and bust is not in the Government’s power. Instead, he thinks some levers could be applied to stabilise the housing market.
But what? It is hard to think how the New Homes Bonus will do the trick. Or that lenders will suddenly start forking out 100% loans to first-timers.
Shapps would, however, do well to look at the ‘mind the gap’ problem between asking prices and actual sales prices.Currently, there’s a whopping £70,000 discrepancy between the average asking price on Rightmove and what the Land Registry, Halifax and Nationwide are all saying.
One of the most interesting (if at times, slightly off-key) debate on EAT last year was in response to a suggestion that if an agent couldn’t sell a property at the price they’d valued it at, then the agent would have to purchase said property.
We’re not suggesting that this proposal be taken seriously.
But over-pricing is a problem that agents themselves recognise, and it certainly isn’t in the interests of house price stability. It also isn’t in the interests of agents themselves, let alone the house-moving public.
It’s basically become a habit. A bad habit.
