I’ll tell you the answer straight away – they are all a result of too much money pushing up the prices. They are all a result of the most insane inflation.
It is peculiar, though, that – in a nation where the establishment is obsessed with inflation – we understand it so little. Nearly the entire discourse about UK house prices has been about the short supply of houses and almost nothing about the over-supply of property finance.
House prices tend to leap in periods of heavy lending, but not in periods of extreme under-supply (I’m thinking of the late 1940s). Yet for some reason, policy-makers only seem able to focus on the latter. There appears to be some kind of blockage in the English mind when it comes to interfering in the financial side of property booms. Yet there now, thanks to buyers from the Far East, appears to be an almost infinite demand.
Yet we naively think we can flatline house prices by building more. It might work better and faster if we could lend less – and limit the influx of foreign buyers.
And for some reason, we don’t see that – when the average Premier League player earns more than £50,000 a week – a similar phenomenon must be at work. We are clearly putting too much money into football.
When the average vice-chancellor pay at a Russell Group university is over £330,000, a similar phenomenon is at work. It isn’t that there are too few vice-chancellors. It is that there is too much money flooding into universities, and paid for by our children.
Something must be done.
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