More Green Belt being lost without tackling housing crisis

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5/10 to the CPRE for this, because it is only half the story.

The real problem is that there is a confusion that unaffordable housing means there is a housing shortage. (Even those houses classified as “affordable” in new developments are out of the reach of most people.)

The price of a house is driven by a number of factors – house prices can go down as well as up.

At the moment, the Bank of England’s ultra low interest rate policy has forced the price of all financial assets, including houses, into a stratospheric bubble. The problem is not deficient supply: it is hugely excessive demand. More and more research into the housing and rental markets is showing that this is the case.

You could concrete over the entire south east of England, including the Green Belt, and under the current monetary policy regime there would not be any reduction in house prices. This is because credit is so cheap that demand is, in effect, limitless.

If interest rates were to be raised to a suitable long term level, this excessive demand would disappear. (And savers and the pension industry might also start recovering …)

The developers know this damn well. Yet they continue to argue that there is a shortage of housing – because it is in their interests to do so.

The sooner politicians stop listening to these weasel words, the better for all of us.

 

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