How the government fiddled house prices

The only reason that house prices have not collapsed is because the government has not allowed them to. That's a policy that will lead to disaster, says Merryn Somerset Webb.

Imagine, if you can bear it, that you are a first-time buyer in the UK. You go to look at a 500-square-foot box masquerading as a two-bedroom flat in an average sort of area masquerading as an up-and-coming part of London. It's a new build one you can just about imagine downgrading your lifestyle expectations enough to live in. The problem is that you can't quite afford it.The good news is that your chancellor is behind you on this one. With you all the way. George Osborne really wants you to be able to buy a house.

So here's the question. Would you like him to help you do that by interfering with the market to ensure that you are offered a long-term loan you wouldn't normally have been able to get? Or would you prefer that he didn't interfere with the market at all, but prices fell to a level, relative to your income, that you could actually afford, and you got yourself a mortgage you could also actually afford on your own merits? I'd go for the latter and I rather imagine most first-time buyers would too. Sadly it isn't an offer Osborne is planning to make for the next couple of years at least.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.