Sir, In Martin Wolf’s enthusiasm to denounce planning regulation as the villain of the piece in the UK’s inflated property market (“ Britain’s self-perpetuating property racket”, Comment, January 9), he ignores the key contribution played by monetary and fiscal policy in creating and sustaining a false market in housing.
Low interest rates prevented a collapse of the market in 2009 but have fuelled the subsequent boom. In addition, demand for housing as an “investment” is boosted by tax incentives in the buy-to-let sector which competes with prospective owner occupiers, driving up prices.
If such tax breaks were eliminated and the central bank stopped manipulating interest rates there would be a rush to sell from the investment sector and prices would fall.
In an era of falling prices, a housing crisis defined as a “shortage” would disappear, and the phrase “negative equity” would become the mots du jour.
London N14, UK
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