Osborne and Miliband compete to see who has the worst housing policy

So who is talking more nonsense about the housing market: George Osborne or Ed Miliband? From today’s newspapers, it’s hard to tell. The problem: the era of low interest rates has fuelled an asset boom. Perhaps an asset bubble. Property prices are soaring to ridiculous levels, unaffordable for anyone without money in their family. This causes real despair for young people. So what to do?

Ed Miliband’s solution: he’ll ‘harness’ (by which he means ‘divert’) money put into first-time buyer ISAs into housebuilding. This policy could only have been devised by a bunch of academics who don’t understand markets. The whole point of ISAs is that people can invest money wherever they like: why would a responsible Prime Minister encourage people to invest into the crash-prone housing sector? That could destroy their savings. And yes, the government promises to top up the ISA on completion of a house purchase – but what if there isn’t a house purchase? Or would he underwrite these ISAs and have the taxpayer make good the shortfall in the stock market value of house builders? How much would that cost, when the next crash comes?

And most of all, does he really think the shortage of housing in Britain is due to a lack of money in the housebuilding sector? A look in the window of any estate agent will tell him that there’s never been more (borrowed) cash going into that market.