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14 May 2014

Why the right should worry about soaring house prices

If home-owners are more likely to vote Tory, shouldn’t the party be trying to create more of them?

By Jonn Elledge

Young people! Suffering from stress and nervous tension? Worried about the ever growing insanity of the British property market? Panic not – for the housing minister Kris Hopkins has decreed that house price rises are, contrary to what you might have thought, rather a good thing.

“I bought a house and I expect the value to rise,” he told Jeremy Paxman on Newsnight a few weeks back. “And I’m sure you did as well.” The comment was so widely seen as out of touch that it made headlines on such unlikely platforms as the Australian TV channel SBS and (no, really) the Daily Express.

In fairness to the minister for buy-to-let and mortgage lenders, Hopkins actually hedged his bets rather more than those headlines allowed for. He pointed out that average house prices were still below their peak, and, frankly, did his best not to respond to a yes or no question to which either answer wasn’t going to win him any friends.

But the reason everybody leapt on it is because it fed into a sense that the party’s chosen strategy for next year’s election is to re-inflate the housing bubble. If house prices go up, the thinking goes, then people will feel richer; if people feel richer, they’ll vote Tory. Simples.

Whether this gambit will pay off next year remains to be seen. But it is, I think, a bloody terrible strategy for the Tories in the long term – and not just because there’s a fair chance it’s going to blow the economy up all over again.

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There are several reasons why Conservatives might worry about the insanity of Britain’s housing market. It means we’re all pumping money into unproductive assets, rather than, say, the next Google. It reduces the number of people interested in price stability (which is good for investors and the wider economy), and raises the number who quite fancy a spot of inflation (which is good for anyone sitting on a massive pile of debt).

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All these things should bother the thinking right-winger. The big one, though, is that ever-soaring house prices would totally knacker the underlying philosophy of modern Toryism.

Home owners, after all, are thought to have a stake in the country: they’re meant to value hard work, law and order and all the other things Tories say they like. It’s no coincidence that the two longest-lasting Tory governments of modern times both set great store by widening access to decent housing. To a large extent, this is what the Tory party is supposed to be for.

Today’s house price boom has broken that compact. More than that, it’s severed the link between effort and reward. In much of the country, it doesn’t matter if you do the right things, and  it doesn’t matter how hard you work; short of a bung from your parents, you’re not getting on the ladder anyway. Why bother? Ever soaring house prices don’t just undermine the case for voting Tory; they might undermine the case for capitalism.

It’d be too much to say that the Tories only have themselves to blame: the Labour Party has hardly covered itself in glory on this one, either. But one suspects that, in the long term, it’s the right which has the most to lose electorally from a decline in home ownership. A whole generation who should be discovering an interest in DIY, low taxes and voting Tory are instead finding themselves stuck in rental accommodation and unsure if they can afford kids. If Kris Hopkins has any sense, he’ll be working on a plan to help them.