No house price rises until 2023 - that's what left-wing think tank wants...

A left-leaning think tank is urging the Bank of England to manipulate the housing market to ensure house prices don’t rise for at least five years - which means they could in effect fall by 10 per cent in real terms thanks to inflation. 

The IPPR says prices should rise “only after expectations of constantly rising house prices have been ‘reset’” and thereafter should increase “no faster than the general consumer price inflation target of two per cent, meaning no further growth in the real value of people’s homes”.

The IPPR said its recommendations were part of a wider plan to “rebalance the UK economy away from finance” so as to avoid another financial crisis.

The think tank suggests that the UK’s financial sector has boomed over the past three decades, creating a strong pound which in turn has hurt exporters while attracting vast levels of international investment in this country - including high volumes of house purchasing in locations like central London.

The current economic conditions have also encouraged more speculative mortgage thinking according to the IPPR. 

In turn this has driven up house prices, especially in hot-house areas like the capital and south east England; the result has been to see ““concentrated market power into the hands of a small number of large banks”.

IPPR spokewoman Grace Blakele says: “Since the 1980s, the UK’s business model has rested on attracting capital from the rest of the world, which it has channelled into debt for UK consumers. The 2008 crisis proved that this is unsustainable.

“We need to move towards a more sustainable growth model, one built on production and investment rather than debt and speculation. To do this, we must break the cycle of ever-rising house prices driving property speculation, crowding out investment in the real economy.”

“We argue for sweeping reforms to taxation of the financial sector, including the introduction of a financial transactions tax on currency trading, combined with an industrial strategy focused on boosting the UK’s exporting sectors” she adds.

The IPPR also demands a transactions tax on currency trading, an increased bank levy, and stronger measures to combat money laundering.