The challenge in dealing with inflation is this government, like many previous governments, approach is to keep filling and painting the cracks on something that needs some fundamental rebuilding. The big problem is they act as though there is no fundamental problem they need to address and the extra filler will do the trick. Their challenge is then to sell this to the public with the help of supposed expert commentators on the economy. It’s no wonder we have a cost of living crisis and cost of housing problems when we have so called expert economists claiming inflation can be lowered but the government helping pay every ones bills. If that was a solution all essential utilities and services would be government owned and free to the public.

The real problem is things just cost too much and the whole concept of a loan has changed. In the past, and what it should be like, is you get a loan to buy something earlier than if you had to save all the money up front to buy it. Borrowing the money, for say a car, before you have the money means you can pay it off quicker if you have to pay for transport in the meantime. i.e if your renting a car then all that rent money can go towards paying the car off. If you have access to a free car then you just save the money wait until you can buy it outright. This only becomes a problem if car prices keep going up so quickly that if you wait until you save enough the car the price has gone up by more that what it would have cost to take out a loan straight away. The main point is, your borrowing money for something you expect to pay off in a reasonable time and the interest rates aren’t that important.

When everything starts costing too much then the whole loan situation changes. People are taking out loans they don’t expect to pay off in a reasonable amount of time and the repayments become a significant part of their income. If they don’t take out a loan then they are wasting money paying for transport or rent which they get nothing back for. If they wait too long then the cost of everything has gone up, often outstripping the rate they are saving. Everyone then focuses on interests rates but it is a symptom of the real problem which is things costing too much. If they really want to solve the housing problem then downward pressure needs to be put on housing, which has obvious risks for all those owner occupiers currently with loans, this includes building cheaper houses, if it was possible. Alternatively, we need to do better with what we currently have. i.e. increasing supply by better use. Government’s are there to govern and change the rules to match the current situation. In a housing crisis there is no justification for someone owning multiple properties and getting rent from people who should be owner occupiers paying off a loan. This is just disgusting. There is also no justification for houses sitting empty if owned by someone who already owns a home. There is no justification of non residents owning homes. These are all things the government can do to fix the current problem as opposed to applying some filler and leaving the fundamental underlying issues in place.

There is also the furphy of increased wages growth. It only works if what you are trying to make cheaper in not affected by the increase in wages. Every time you hear someone saying, “we are going to address the housing and cost of living crisis by increasing wages growth”, ask them if they think it is unfair that all those people involved in housing (builders et al) food production and delivery etc, have to forgo a pay increase so that things actually become cheaper for those lucky enough to get a pay rise.

Wages growth is not the solution, building more houses at the same price as current houses is not the solution. We need fundamental changes to the structure. Houses cost too much, stop building more at the same price and expecting things to get any better. Stop expecting wages growth to fix the problem. We’ve heard this for decades and it has got us to where we are now.

Everybody loves the word productivity, apply it to housing. Remove as much money lost to rent payments as possible because this is wasted money for someone wanting to own a home. We want all average incomers to own a home by the time they retire so they don’t end up on welfare for housing. Make better use of all existing houses with priority to owner occupiers. It’s a crisis, you don’t hoard toilet paper and expect government subsidies to on sell it. You should expect the same for housing and should not own more than you personally need to live in.