The everyday blog of Richard Bartle.

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10:39am on Friday, 24th March, 2006:

House Buying


One of the things that the Chancellor of the Exchequer promised in his budget this week was a shared equity scheme "to help young homebuyers get on the property ladder". You get a 75% mortgage from a regular lender, and a 25% mortgage from the government. The government's mortgage is interest-free, but you have to give them 25% of the proceeds when you sell your house. I'm assuming there's an "at or above fair market value" clause in there somewhere...

It's all just delaying the inevitable, though. If first-time buyers are increasingly unable to buy a house because of rising prices, the smart thing to do is to wait for the market to adjust. The unsmart thing to do is to subsidise them so that house prices continue to rise until first-time buyers once more can't afford them.

As it is, the price of a house is out of all proportion to the price of anything else. An average house in London will sell for about £300,000. A week on a decent cruise ship will cost you roughly $600 plus maybe some expenses, so let's say £500. In other words, if a couple sold their London home, they could spend the next 6 years living on cruise ships from the proceeds.

It's amazing the economy is still functioning.

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Copyright © 2006 Richard Bartle (richard@mud.co.uk).