OpinionJul 29 2015

House prices: it’s a laugh a minute

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Have you heard the one about the record-breaking house prices and the rising interest rates?

Ok, this is n’t really a joke, it’s about housing. And the fact that the average price of a home is now £181,619 – more expensive than it was in November 2007. Hands up who remembers what happened next all those years ago.

With Bank of England governor Mark Carney warning that an interest rate rise is due at the end of the year, it looks like we are going to find out if the new safeguards the government has put in place will work.

It’s true that many people we speak to say the market isn’t currently overheated - though it has been overheated in the not too distant past.

According to the CML house price inflation has been outstripping earnings growth for a while and it has suggested that demand is fading as houses become too expensive.

This is certainly one way of making sure the market doesn’t overheat but surely it only serves to push people into the private rental sector where – surprise, surprise – the Bank of England doesn’t have the regulatory powers that it has over owner-occupied mortgages.

Certainly the government’s Help to Buy programme is having some effect – though first-time buyers trying to get onto the ladder in London, where the average house costs more than £480,000, might be bemused with the Help to Buy Isa which offers £3,000 towards a deposit which at the lower end will be nearly £25,000 in size.

But perhaps the best thing the government can do about this is try to tackle the fact that housing is so important to our economy.

Maybe we could make things again.

At least this might convince people to treat their houses like homes and – maybe – mean financial journalists wouldn’t have to spend so much time worrying about house prices.

That might not be funny, but that doesn’t mean it’s not worthwhile.