George Osborne is going to spend a fortune keeping house prices high

Posted on

As anyone of my age knows, house prices are a middle aged person's obsession, for two reasons. First, baby boomers wealth is dependent upon their increase. Second, they have no idea how their children will be able to afford the houses they once bought.

Now George Osborne is to announce a plan today that supposedly helps people onto the housing ladder. Those earning less than £80,000 out of London and £90,000 in it (or let's for simplicity say well over 90% of the population) will be allowed to buy homes on a subsidised basis.

But let's be clear what this does. This is not a subsidy to buy homes. This is a subsidy to keep up house prices and to ensure people borrow the maximum possible.

George's economic plans are critically dependent upon house prices increasing at 6% per annum, and they are not. The result is that he is giving state subsidies to make sure that they do. As a result he is using state money to increase the wealth divide in society, keep housing unaffordable and keep the vast majority off the housing ladder.

This is no panacea - except for the debt free, ageing baby boomer, and a desperate Chancellor. Please don't read it any other way.