Here at Property Finders London, we are big fans of free markets and think that government intervention should be avoided wherever possible. This is in direct contrast with most politicians who think it is vital that they “manage” the economy, basically so that they can get re-elected. Unfortunately this has never ever worked over the long term. Think Communist Russia, China and Cuba. Think the UK under Brown & Blair where “Boom and Bust has been eradicated” according to Gordon the Moron (which by the way is an excellent book covering Brown’s years as Chancellor). That ended well…
The reason why we mention this, is that last week the Royal institute of Chartered Surveyors said that annual price rises of 5% should trigger action by the government to halt further price rises. They could do this by capping the amount people could borrow/banks could lend.
Why are RICS getting involved? There has been a lot of concern that the new confidence and price rises in the property market are leading to another bubble. Of course the main reason for the recent rise in house prices is government meddling in the shape of the Help To Buy scheme. Apparently the answer to government meddling is more meddling!
It cannot be understated quite how stupid and dangerous these policies are becoming. No-one can steer an economy for a prolonged period of time because the economy, be it national or global, is far too complex. For example, what is right for London would almost certainly be disastrous for the economy in the north of England.
The hubris being displayed is mesmerising. Yes markets and figures can be manipulated temporarily but you cannot fool all of the people all of the time (think Exxon Mobil). More importantly the rules of mathematics will assert themselves – probably at the most inconvenient of times.
We may be being naïve to hope for less political intervention. It is also possible that such intervention may actually work and “cool” the property market. However, what is guaranteed is that it will cause a boom and bust elsewhere as the money will go somewhere.
So, lets just let the property market sort itself out.