Monday, January 24, 2005

I was never that hot at economics, but...

...I thought I understood the law of supply and demand. From the early 1980's the Tory Government's council house sales programme encouraged tenants to buy their council houses for whacking great discounts. Local authorities were not given the capital receipts to plough back into housing, and in any event, who was going to build new houses when they knew the tenants could buy them and leave the council with the debt. Building Works Direct Labour Organisations were privatised with compulsory tendering, did everything as cheaply and proftable as they could, and those houses that were not wanted by purchasers fell into decline. Councils governed by all three main parties started selling off whole estates (or their complete stock) to so-called social landlords who prided themselves on charging 'market rents' comparable to the private sector.

The result? Less houses for those on average to low incomes, greater demand for the 'Barretts Boxes" that were being built... house prices rise due to the shortage, making it even more difficult for those on low incomes to find somewhere to live. Followed by politicians from all three political parties making fatuous remarks and blaming each other. No doubt the construction companies and Rachmanite landlords are rubbing their hands in glee. Those who have got somewhere to live can feel smug about their rising property values... and the banks and building societies jump for joy in anticipation of those self same smug owners having to remortgage to try to get their kids on the property ladder. The economics of the madhouse.