Ever since Mark Carney took over at the Bank of England, a culture seems to be in play where inference seeks to influence reporting and statistics. And the Chancellor seems to have joined in – sometimes not so subtly. The mission? To maintain some sort of control over the housing market. Political promises and economic reality have combined to produce a seeming flip-flop of policies and statements that leave the market in a quandary. This confuses those who would be potentially affected, which is particularly unhelpful at a time when concrete news of any sort is palpably lacking.
Potentially damaging is the latest talk of interest rates rising by the end of the year – really?
Personally I’ve yet to be persuaded by anyone who seriously feels our economy is back on its feet or that we’re ready to give a signal that we’re on the way to normality.
The obsession with pulling levers to control prices by tinkering with demand has unintended consequences and, given the contribution of UK Property PLC to GDP, what’s happening in Prime Central London at the moment should serve as a timely warning.
While it’s too early to sound the death knell for PCL, the market that drives London is running out of oil. That’s not a grotesque pun on Middle Eastern money, but a lament on the Conservative party’s obsession with curtailing the perceived blanket sale of prime real estate to foreigners. This has led to a set of draconian costs released from the skunkworks at times of maximum obfuscation, like when everyone was distracted talking about mansion tax. Right now, these overbearing measures are squeezing the last drops out of a vibrant, dynamic market.
If they considered creating an open debate on supplying and building more homes instead, many of those struggling to get on the housing ladder might be prepared to wait, and this, in turn, might ease the pressure on the market.
City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.