THE BLOG
17/09/2013 08:31 BST | Updated 17/11/2013 05:12 GMT

The Balloon's Going Up

A woman was terrified to find a fox licking the fruit flavoured moisturiser off her six year old daughter's face and, broom in hand, had to chase the animal for an hour and a half to get it out of her £1.5m terraced house in Clapham. Isn't that incredible? Not the part about the fox, the part about the cost of a tiny terraced home in a not very nice part of south London.

One and a half million pounds for a poky house that is attached to other small houses on both sides. One that has a garden about as large as a bath mat. A house that is just 15 feet wide, three feet of which is hallway and so has a living room just 12 feet across. Twelve feet would be a generous corridor, it is an unbelievably stingy room in which to spend most of your time at home, especially if you are living with other people. Prisoners get more space.

In a twelve foot wide room, the sofa can only go flat against the wall. Putting the TV on the opposite wall would make it so near that the viewer would get radiation burns on the back of their eyeballs, so it has to go off to the side, at an angle to those watching, and usually sits uncomfortably straddling the far corner, which also isn't that far away.

The bedrooms are just about big enough to get one of those smaller double beds in and come with enough cupboard space for you if you don't actually own anything. On top of all that, you can hear every cough, murmur, door slam, foot fall, child's cry, pot clang and sex grunt from next door - both next doors. You can even get woken in the morning by the alarm going off on your neighbour's bedside table. And all that for one and a half million pounds, or as much as it would take the average earner to amass in sixty years.

So, for what on the face of it seems like a pretty horrible place to live - noisy, cramped and infested with foxes - it would take the average person their entire life to save up for, assuming they did not spend a single penny on anything else in all that time and the government let them off all of their taxes. If that is not insane, then I am Napoleon Bonaparte.

Fortunately the coalition is doing something to address this problem of un-affordability. As you would expect, if you are a keen observer of the government, it has decided to make it worse.

The experts that run this country's economic policy are wrestling with the world-wide financial catastrophe that was in large part caused by the gifting of mortgages to people that could not afford them. They closely examined the root cause of the problem and they came to the conclusion that the solution is the exact same thing that got us into this mess in the first place.

Unbelievably, they are now encouraging, nay, demanding that banks open the sluice gates of easy money that propelled the world to the precipice of disaster. They are doing it right now. They will be double doing it come the new year, despite the fact that every single person who knows anything about economics is telling them that they shouldn't.

It is called Funding for Lending. In short, the government is giving the banking racket a ton of free money in the hope that they will then lend it to businesses to help entrepreneurs haul us out of the quagmire we are all in. The banks said thank very much and are using it not to help businesses but to inflate a property bubble that will make them more money. Genius. I would call it the law of unintended consequences but even a dead, blind bat could have seen that coming. Unfortunately we do not have a dead blind bat as Chancellor of the Exchequer, we have George Osborne.

This will all get turbo charged when the Help to Buy scheme comes on full force in January.

The only logical explanation is that with a general election a mere 20 months away, the Chancellor is betting the future of the country on an upswing in property prices that will make home owners more likely to put their cross next to the Conservative candidate because they will feel better off. It is the essence of short term thinking and will reap the reward that usually comes with such a policy: short term benefits for those that won't feel the pain of any eventual come down.

The property market in London has already become detached from that of the rest of the country, and from reality itself. It has been propped up by the influx of foreign investors seeking something to put their money in that will bring them a better reward than stocks, or gold or all the other assets that have become less attractive during the recession.

While the super rich compete with each other for houses they most likely will never set foot in, the rest of the market has been lifted as a consequence. Those people that used to be able to afford what is called Prime Central London are now fighting over houses in places that they normally would not want to drive through on the way to the airport. London property is the bubble that never burst, and now it is being inflated again as a government policy. The whole world's gone mad.

The Bank of England has said that it will delay the inevitable rise in interest rates until the moment that unemployment is lowered to 7%. The figure just went down to 7.8%, almost entirely due to a massive hiring frenzy in the estate agent business. They are taking on more of those youths that stand there drumming their clip boards and tutting if you take more than five minutes to decide if you want to buy the place they are showing you.

It is this scramble to re-employ the agents that were fired in the down time that will bring forward the rate rise, which will tip people already struggling over the edge and lead to plunging house prices. This in turn will cause the estate agents to re-fire the same agents they just took on. I think that is called irony.

It is not the only crazy thing about the property market. The most insane part of it all is that most people spend more time trying on shoes before buying them than they do examining a potential home. They will spend more money on their property than on anything else they buy in their entire lives (oligarchs not included) and yet they will not know what it is like to live in a place before they buy it.

They will not know what their neighbours will be like, whether they have screaming children, yapping dogs or are one of those neighbours from hell whose exploits the papers often gleefully describe. They will not know if the place will be warm in the winter or cool in the summer, if it is quiet or noisy, draughty or cosy or any of the other characteristics and qualities that make a house a home. They will just sign on the line, trust the report a surveyor that they have never met has made and cross their fingers and hope for the best.

The frenzy that the press are describing of rising house prices will make this worse - panic buying is back. No one wants to miss out. The fear is that to fail to grasp the rope of the balloon as it sails upwards will leave you renting for ever. That the government is actually encouraging this is almost beyond belief. It is not that they have learned nothing from history, it is more that they don't even learn anything from the present.

Still, I am sure that sly fox George Osborne has thought all this through and has made his decisions based on what would best suit the prospects of George Osborne. Maybe we should chase HIM out of the house with a broom.