Westminster blog

A tea-spluttering moment this morning when I read Anatole Kaletsky in The Times. 

Until recently the paper’s economics guru was a bull on the UK economy/housing market (accurately as it turned out).

Today, perhaps inspired by the latest IMF report, he was talking about price falls of up to 30 per cent.

 You might feel sympathetic towards Gordon Brown at this point. Why should he take the political flak for any downturn?

Here are three reasons which come to mind:

1] Changing the Bank of England’s inflation target from RPI to CPI (which does not include house price inflation). This enabled the monetary policy committee to cut interest rates much further in recent years. This allowed people to borrow more. Boom.

2] Shifting planning guidelines for new homes from greenfield to brownfield. Though well-intentioned, this has led to a glut of city centre flats, bought mainly by buy-to-let investors. Fingers will be scorched.

3] Rhetoric. Policies, speeches and initiatives have been laced with the presumption that house prices were a one-way bet. The target for home-ownership was upped to 90 per cent (why have one in the first place?).

Even now, the government is “helping” low-paid public sector workers risk what meagre savings they have getting on the housing ladder……as if this can only be a good thing.