Will Reducing Housing Benefit Reduce The Price Of Houses?
I follow the logic of the government when they say they must cut the cost of housing benefit. The sums of money are enormous and nobody wants to be paying taxes if the money is being wasted but how can we judge if money spent supporting people and helping them stay in their homes is in all our interests.
There is talk of a mass exodus from city centres, particularly for London. There is talk of many people losing their homes. There are two conclusions I believe can be drawn from this. House prices are still too high and rents are often beyond what the true market can bear.
We can now also confidently say that owning property is not for everyone which is rather interesting since it was a Conservative government that went to such lengths to encourage people to buy their own homes.
The breaking down of financial barriers with the associated encouragement to buy. The previously unheard of availability of mortgages for all and the the selling off of much of the publicly owned council house stock around the country, in a wave of new home ownership, contributed to the large growth in house prices to help get us to where we are today.
So where are we today? House prices are beyond the reach of many first time buyers because they are unable to raise the larger deposits required or obtain mortgage funds.
It can be no coincidence that the stabilising of house prices and the difficulty of raising a mortgage has coincided with the halt in the upward march of house prices. The cost of buying a house has had very little to do with the actual material cost of building a property or it’s true value. Demand was created by the availability of mortgages and the generous terms that were offered to anyone looking to buy.
Unfortunately the flood of available loans pushed prices higher and higher which was great if you owned property but was hard for first time buyers who took on huge debts to buy a house. Many of those people who did what everyone told them was the right thing, i.e. invest in a home of their own are now finding themselves struggling to pay the bills.
For those who have found themselves made redundant or have become medically unfit to work the problems are even greater and the stress such problems cause can only add to their difficulty in finding work.
We live in a world where your financial worth is far more important than anything else. To business and largely to government, you are just a number on a computer roll. As a person you simply do not count unless you are buying things and paying lots of tax. It seems harsh but voters problems only really matter when there is an election looming.
The country faces huge problems balancing the books and it is important we do so. Pushing people out of their homes is I suppose one way to do it though it is one I am, to say the least, very uncomfortable with that policy.
It is ridiculous that a taxpayer on a low income has to help foot the bill to keep a family in a large home that they could never afford to live in. We do need to find a balance.
So, to come back to my original headline for this article. Will reducing housing benefits reduce the price of houses? It seems certain that it must. When the government takes away support for a sector of the homes market that must have an impact.
It will reduce average rents and this may well lead to a reduction in let properties and that reduction will lead to more homes being put up for sale. Those landlord owners will make sure their properties will be priced to sell. i.e. lower prices to sell quickly. That must surely reduce the balance of supply and demand and cause lower house prices.
