Three unofficial state secrets about the housing problem
by Gavin Putland
re-posted from his blog
Secret 1: The purpose of encouraging home ownership is to create a majority of voters who own real estate and who therefore support policies that make real estate as expensive as possible, for the benefit of the biggest owners.
Secret 2: The purpose of financing home ownership through debt instead of equity is to make sure it’s the millions of voting “owners”, and not the handful of financiers, who fear falling house prices, and to make the consequences of any such fall as serious as possible, so that politicians must do everything in their power to prop up prices — and the most recent graduates from rent-slavery to debt-slavery are the most fervent supporters of the policies that make their lives difficult!
Secret 3: One reason for the persistence of conveyancing stamp duty, in spite of its demonstrable downward effect on prices, is that it discriminates against equity-based methods of financing home acquisition (by taxing them twice), and therefore props up debt financing, which props up the policies that prop up prices.