November 14th, 2010

The Truth

Housing

Ok, so the government says that by paying less housing benefit this will cause rents to drop.

This is obviously arguable - but let's take their word for it for a moment.

This drops the return on property - because you'll be getting less back for your investment.

Which means that the property is worth less.

Which will cause the market to drop.

Now, I'm fine with that*, but it seems like an unlikely thing for a majority Conservative government to want...

*It makes it easier for first-time buyers to buy. And when people are buying there's less pressure on the rental market, which pushes prices down - we've got the opposite problem at the moment. Of course, there's the question of how much a falling market will cause people to avoid buying as well. Complex stuff, economics.