House Prices - Who is to blame?

As the media has now officially reported that house prices are falling and will continue to fall in the UK it is worth revisiting the cause of the present problem:

Mass Immigration. The Labour government opened our doors to mass immigration which in effect increased the overall demand for housing. An increase in demand equals an increase in prices.

Easy Credit. Under Gordon Brown’s watch, credit in the housing market has ballooned which in effect increased the supply of money. An increase in the supply of money equals an increase in prices.

Family Fragmentation. Labour policies have exacerbated the trend towards single occupancy households. As tax, welfare and moral relativism have entrenched themselves into our society, so has there been a breakdown in the nuclear and extended family. This has in effect increased the demand on housing. An increase in demand equals an increase in prices.

It would be balanced of me to acknowledge the inability of supply to keep pace with this increasing demand but although economically correct misses the point. These three factors are what has upset the equilibrium and caused the house price bubble and they were all within the control of the government (not completely but mostly) which wilfully or incompetently ignored them.

As we look for scapegoats and people to blame, it is just as well to go back to the start point: government policy that has caused one hell of a mess. It has put prices beyond the reach of most first time buyers and it has caused a bubble that will catch some, if not many, in negative equity.