Stable house prices won’t happen by themselves

Grant Shapps has impressed in the housing brief, arguing that house prices rising faster than wages is not a good thing (with which Policy Exchange’s report, Making Housing Affordable, agreed). He has probably been encouraged by the fact that some recent polls have shown even a majority of owners want prices to stop rising. Perhaps having your kids live with you until they are 40 just isn’t a popular option? More so, rising house prices only benefit those who downsize (now rare) or own multiple properties; and in the wider economy it mostly discourages productive investment and encourages borrowing – hardly good things.
 
But while Shapps’s aim is laudable, he needs to be clearer about how we get there. Ultimately, there are two things to do if you want stable prices, increase supply and stabilise demand. You need to have a framework that builds stable house prices into government policy.