House prices may not fall, whatever the cost (to the taxpayer). From The Torygraph:
Government failure to provide support for struggling homeowners will trigger a “tsunami of repossessions” which will damage house prices, experts have warned.
And who are these experts, pray tell?
Andrew Wishart, of Capital Economics, a research firm, said: "We now forecast that the unemployment rate will rise from 3.8pc to over 5pc, which will push up repossessions, though they should remain well below the levels reached in the house price crashes of the early 1990s and 2008." Capital Economics has forecast a 7pc house price drop over the next two years...
The article does not say on whose behalf they did this research, he who pays the piper calls the tune. And there another three years to go before it all collapses again, they should know that by now.
A Government spokesman said: “We recognize people are struggling with rising prices which is why we are protecting the eight million most vulnerable families with at least £1,200 of direct payments this year, with a £150 top-up payment for disabled people.”
Why would banks lend shed loads of money to the "eight million most vulnerable families", knowing that any rate rises would tip them over the edge? Because they know the government will bail them out? It works out far cheaper (i.e. saves the taxpayer money and makes a reliable small surplus year on year) just building council housing for them.
And it's another reason for simply nationalising all lending to home buyers. Why let commercial banks make hay while the sun shines and bail them out when it starts raining? That way the taxpayer gets the profits in the good times, as well the losses in bad times. Without house price/credit bubbles and reckless lending, banks would be far more resilient and there'd be no need for taxpayer-backed bail outs.
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