Getting on the UK Housing Ladder
One of the most serious challenges facing young people today is how to take that first valuable step on the housing ladder. How characteristic that it is Gordon Brown, Labour's one truly successful minister, who has identified this very real problem.
House prices in parts of England are now around eight times the average salary. The result is that first time buyers, who used to account for more than half of all house purchases are now responsible for just over a quarter of them.
The Chancellor's solution - one that was first suggested by the Tories - is to spend up to £1billion in helping more than 100,000 people to buy their first home. These would-be property owners will have to raise as little as half the value of their prospective purchase with the Government and mortgage lenders financing the rest and holding an equity stake.
This is a bold strategy. And the economy can only benefit if it leads to more home ownership and more stable prices by guaranteeing a consistent supply of first time buyers. Now for the 'buts'.
There are already questions about the way the policy is likely to be implemented. It seems it will be left to building society and bank managers to choose deserving applicants and that there will be no means test or restriction on types of property.
It is potentially open to abuse and there must be some concern that it will be most used by those who know how to play the system rather than those in most need.
Moreover, what is to happen when the Treasury has its own property portfolio? One thing is certain: Ministers will want to know the worth of their investment - and that can only mean armies of additional bureaucrats.
It is also disturbing that Government involvement may distort the property market's effective - though often painful - self-correcting mechanism. If it simply fuels house prices, first time buyers will eventually find themselves even worse off than before.
Building 200,000 houses as New Labour has promised might ease the problem, but if they are constructed in the South East (where the issue is most pressing), they will result in an already crowded region becoming even more overpopulated.
Given the need to help first time buyers - particularly those such as nurses and police officers who provide essential services in every part of the country - this is a problem that needs addressing. Whether Mr Brown has the answer remains to be seen.
Source: The Mail
Date: 23.05.05
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