Nothing the government said in the Budget will aid the housing market. A toothless bunch, the market has recovered through hard work and honest advice from estate agents, not the policies or schemes that the government has introduced in recent years. Yes, it is estate agents that have got the housing market moving again by advising sellers to reduce their prices and managing their expectations more carefully. The housing market is fuelled by simple supply and demand, a basic economic principle that the government has failed, and continues to fail, to grasp.
For as long as most people can remember, we have seen a pattern of boom and bust. Sure, I accept that there have been some extenuating circumstances such as mortgage indemnity guarantees, which were all the rage in the 80's, and the abolishing of HIP's, which have contributed to the housing market falling. But, the key point that our government fails to realise is that their intervention has only ever helped the market to crash, rather than prosper in a steady and sensible manner.
The first port of call, for anyone in government with an ounce of sense, would be to tackle the many empty houses, and sometimes entire streets, around the UK. This would quickly add a few thousand more properties to the supply chain automatically.
Next, would be to develop a house building strategy that actually promotes the building of houses! How? By reviewing and relaxing the antiquated and stringent planning laws across towns and cities all over the country. This is the essence of why we have a boom and bust culture in the housing market. It is already happening in London and the commuter belt towns and will eventually ripple out to other towns. It's as if houses are going to run out in London!
And that's the irony. So far this year, people have started fighting over property because there are not enough of them to go round. We are supposed to be in one of the worst economic crises the world has ever seen, but come and work in our office and you'll see it's not the case! Properties at the right price are literally being fought over.
Lastly, the government's ridiculous strategy of allowing 'apartments' to be built everywhere needs to be rethought. There is a place for these types of properties, but if they allow too many to be built, then they will only become the high rise flats of tomorrow. Amongst my fellow estate agents, there is little doubt about this. With only a certain level of demand for flats and apartments, the level of supply needs to be dampened now before it's too late - enough have already been built!
What the UK needs is accelerated but sensible building of houses. This will lead to more choice for buyers which in turn will mean prices will continue to increase at levels closer to the rate of inflation. What we have now is a six or seven year boom with prices increasing at 10% per year and then crashing by 30%!
In my opinion, if the government don't address the fundamental issue of supply and demand, then we are already at the start of a 'new cycle', which will be great for the next eight or nine years, but no one will enjoy it in 2023 when the same old thing happens again.
I'm also seriously concerned by the announcements in the Budget as they will surely just lead to house prices rising and a future house-price bubble. The Chancellor said that the measures he announced to boost the housing market were designed to help "people who are trying to work hard... to raise their kids in the right way." But with the issue of supply ignored, those kids are still going to struggle to 'get on the ladder'.
I simply can't see how shared equity loans of up to 20% on new-build homes and the underpinning of £130bn of new mortgage lending could cause anything less than an increase in demand and therefore property prices. The government is creating the demand, but there isn't the supply. And there has never been a shortage of demand!
In conclusion, rather than the government meddling in the housing market by dreaming up new headline grabbing schemes or getting rid of old, and not surprisingly unsuccessful ones, they need to sit down and confront head on the simple issue of supply and demand. Only then will they be able to come up with a sensible and sustainable house building strategy that solves the underlining problem, while maintaining as much of the countryside as possible.