Not the time to push up house prices

Monday 19th January 2009, 3:00PM GMT.

ANYONE who imagined that Housing Minister Terry Le Main’s proposal to reduce the qualifying period for home ownership to ten years from the present 12 was going to be uncontroversial was, quite clearly, wrong.

No less significant a figure than the newly appointed Assistant Housing Minister, Deputy Sean Power, has now joined the chorus of objection to a bewildering move which the minister has yet to come remotely near justifying.

In common with many other critics of Senator Le Main’s plan, Deputy Power says that it would be foolish in the extreme to tinker with a market that is currently overinflated to an obvious extent with a view to promoting demand. With commendable common sense, the Deputy points out that, as matters stand, a great many Islanders are struggling desperately to put a foot on the housing ladder in the face of prices which are nothing less than ludicrous.

It is conceivable that the sudden injection of new buyers into the housing market would prompt activity not only there but in the economy as a whole. It is also conceivable that this would be more than acceptable to those who have their eyes fixed principally on boosting economic activity and so helping to prevent the worst effects of the recession.

There is some merit in that view, but, crucially, it is not the responsibility of the Housing Minister to stimulate the economy in general. In addition, the potential costs of such a dramatic change in the rules are too great to be risked at this uncertain stage of the unpredictable proceedings.

What the Jersey housing market needs – for the benefit of Islanders who would dearly like to enter it – is, at the very least, a period of stability, and probably a period of readjustment downwards.

No one wants to see the catastrophic collapse of house prices being experienced in the UK or, perish the thought, widespread negative equity. It is, nevertheless, time for sanity to be restored, and we can be quite confident that the reverse will be evident if artificial means are used as a fillip for demand which simply is not needed.

Senator Le Main’s idiosyncratic and knee-jerk approach to this issue is especially baffling in a year when the States will hold a long overdue major debate on what levels of population and immigration the Island can sustain. The Housing Minister, to put it mildly, is putting the cart before the horse.

How the present clash between the minister and his second-in-command will resolve itself remains to be seen. It is, however, to be hoped that the report on the consequences of reducing the qualification period which is now being prepared by Housing department staff will introduce some realism and logic into ministerial thinking.

1
In the industry

January 20, 2009 at 9:00 pm

Could we have some facts and figures instead speculation please ? Firstly the reason we got to this stage in the housing market lies purely at the states feet for a lack of legislation to control the Banks, estate agents and surveyors and other lenders JHL for example.This has been the process for the last few years. Mr A wants to sell his property. Estate agent B says sure it’s worth £500k and surveyor C agrees. Mr B gets ripped off for £50k but hey he’s on the ladder with a 100% mortgage and at least he is paying his own mortgage, Right ! This then pushes up the price of the next house because if Mr B pay it then so will Mrs C or even more and on and on we go. Estate agent gets his 1.5% surveyor gets his fee. And because the banks were willing to just give money away we are now in this position where a two bed down the road just went for £480k. Demand has not risen the house prices. Everyone who could jumped on the chance when the banks where giving the money away and who could blame them.

I would like to see the figures of how many people actually got there qualies when it was reduced from 13 to 12. Of those how many could afford to buy property. Not many I would imagine but at least they may have been able to rent some decent accomodation for less than £1500 a month. More so than now if they bring the qualies down to 10 years as you need 10% deposit say on a £400k home 2 bed obviously. Legals, Survey etc £60k perhaps. Yeah I’ll have two please. Seriously Mr Power needs to get a grip. I would estimate that perhaps 50 people in the whole Island could afford to buy.

As far as increasing the house prices that’s down to the unregulated mortgage industry not supply and demand. In the JEP on Monday last therte was 8 pages of property for sale and that’s the ones worth advertising. A friend of mine recently knocked £50k off the asking price of their new home. That would not have happened a year ago. So although people are asking the same amount they are not getting it. The estate agents won’t tell you that because if asking prices fall so do there commision. Thankfully there are vested interests in the housing market from deep within the states and they will not want to see there property assets deflate. So Mr Power has his work cut out.

I would imagine that dropping the Quals to 10 might stimulate the flat market as that’s all the common man can now afford as the banks have tightened the lending criteria.

I have just been watching the Obama story. A black man president of the USA and yet in Jersey a wealthy Island we have below par housing, social, and welfare. And of course a descriminatory housing system which is in direct conflict with the court of human rights.

I know I know, no one forced me to live here blah blah, and now that I have paid my £80k on rent in 12 years, putting money in local pockets I can get lost. Why because now I’m qualified and no more use to them. Now I am taking up their property. I’ll get me coat…..

Report abuse