So the solution to a dysfunctional housing market is to make it more dysfucntional?

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It seems that the housing sector has been captured by people whose grasp of economics and understanding of markets is diminishingly small. The Labour Party - under the direction of that old Stalinist, Jack Dromey, has had an enquiry. And the solution is:

A cross party inquiry led by a Labour peer is today calling for £5 billion of quantitative easing cash to be used to build homes across England, and for a £3 billion increase in funding for social housing.

Other ‘emergency measures’ demanded in the Housing Voice report include making the housing minister a cabinet position, and deferring the merging of housing benefit payments into universal credit.

In the medium and longer term the group wants to see the affordable housing budget raised to £4.75 billion a year, and for a national commission on affordable housing to be set up to report before the 2015 general election.

These people are serious about this you know. They really do want to print £8 billion and give it to housing developers. To build social housing - that's subsidised housing to you and me. Because there's a housing crisis don't you know?

Well yes there is a housing crisis but not the one you're thinking of. The crisis is that the social housing 'sector' isn't able to develop as much as it used to develop because the government isn't bunging in enough subsidy. This enquiry and its 'solutions' seems to be good old-fashioned grant-farming. Give us lots of subsidy and we'll build lots of houses in places where people don't want to live. Meaning that we won't have to answer the big question of how we get more houses in the places where people do want to live and where there's work for those people that mean they can afford those houses.

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JRF remind us why lefties shouldn't be let anywhere near housing markets

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I know. I know. JRF are a sainted, untouchable collections of lovely cuddly trendy lefties. But when they write about affordable housing and housing markets we should never forget their massive vested interest as the owner of a substantial stock of housing let at "social rents".

And their latest ideas are pretty strange. They want to change the basis of Council Tax claiming that it skews the housing market because it doesn't accurately reflect housing values. Apparently (or so their spokesman said on the radio this morning) this will sort out the volatility of the housing market.

And JRF propose mortgage credit controls:

There is strong evidence to support the view that the FPC should be given powers to employ
quantitative controls on mortgage credit, as a means of securing financial stability.

On the one hand JRF talk about government supporting people in buying houses (yes folks, I know this was what got us into the mess in the first place) - in this case by a jolly scheme called SHOP designed so poor folk can have default-free mortgages. A scheme AIG would rush at no doubt:

The fund would be used to purchase ‘block’ insurance from the private sector. Block insurance is much cheaper than individually purchased (retail) insurance as the fees/up-front costs are much reduced. In the event of a designated risk (loss of employment, self-employment, accident or sickness) borrowers would be entitled to a fixed period (e.g. 12 months) of non-means tested assistance that would cover both interest and capital payments, after a short period of lender forbearance.

And then they propose mortgage credit controls to stop volatility in the market. The technical economics term for this is: "having your cake and eating it".

Then we get to the crunch of JRF's lobby: loads of lovely subsidy for rented - specifically 'affordable' rented - housing. Note the contradiction between encouraging home-ownership (through promoting softer lending and default-free mortgages) and lobbying for more rented housing!

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