Cameron: how to raise house prices even further

There are occasions when I despair of the miserable failure of the Westminster world to understand what is staring them in the face - and I must admit I felt that listening to David Cameron's conference speech about housing.

It isn't that I disapprove of home ownership. Quite the reverse, I think everyone should own their own home. It's a sign of civilisation and independence. It is the complete mismatch between Cameron's policies and his stated objective that is so infuriating.

In fact, I can't think of any area of public discourse so shot through with complete twaddle as housing policy,

Simon Jenkins hit the nail on the head in his recent article on the most damaging housing myths. He was absolutely right that there is no connection between increasing the supply and bringing down prices. Again, quiet the reverse:

"The chief determinant of house prices is the state of the market in existing property and the cost of finance. During the sub-prime period, prices soared in America and Australia despite unrestricted new building. It was cheap money that did the damage. The house-builders lobby equates housing to “new build” because that is where their interest lies..."

This is the point I was trying to make in my chapter on house prices in Broke: How to Survive the Middle Class Crisis, but the Westminster world seems sold on it. There must be some relationship between conventional supply and demand - but the supply of housing finance, now almost infinite, will always stay ahead

The idea that rising prices has something to do with planning controls is also completely fatuous,  There is outstanding planing permissions for 400,000 homes, not being built - because the prices will be too high to offload.

But even Jenkins then went on to get it wrong himself in the bizarre, but horribly mainstream, idea that all we need to do is to increase urban densities.

This has been the preferred solution from environmentalists and architects alike. To do it on any scale would mean reducing the vital informal green space that makes cities liveable - and which will be so important economically (more on this another time!). It also now has a proven role keeping us all sane.

Building upwards has always been disastrous in UK public policy.  In the end, the rich keep their lower densities and their green spaces, and the high densities get visited on the poor.

Or as Marie Antoinette might have said: "They have no homes? Let them live in flats."

Just have a look at where that kind of inhuman planning leads next time you are around East Croydon, where the new slums are taking shape, for sale in Singapore (pictured above).

In the meantime, putting more money in the housing market, and letting a few people sneak in via 'affordable prices' which are still ten times what anyone can afford on the minimum wage will only raise prices even further.  And the idea that rents are driven up more by demand than by the cost of buy-to-let mortgages - well it is more of the economic illiteracy that is driving our housing disaster.

If house prices rise in the next three decades like they did in the last three decades, the average home will be worth £1.4m.  I didn't suppose that would actually happen - but then I heard Cameron's vacuous speech on the subject.

No, to bring down prices you have to control the amount of money going into the housing market, especially from overseas. To cool down the property market in London and the south east, only major devolution of power and a regional revival will do it.

And for goodness sake leave the green belt alone. It is all that prevents London expanding across southern England in a soulless sprawl.

AND! My ebook Operation Primrose is on special offer for 99p this week. There is also a conventional print version here. 

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