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By Philippe Legrain 1 COMMENT

An excellent article by Tim Leunig of the London School of Economics in today’s FT points out that the fall in UK house prices due to the credit crunch is not making housing more affordable for the less well-off.

On the contrary: while banks are still ready to lend on good terms to wealthier borrowers with a good credit history and plenty of capital, they are restricting their loans to first-time buyers with small deposits and charging more for them. So lower house prices will not benefit most first-buyers.

His conclusion:

If we want to make housing more affordable for all, there is only one thing that will work: building more houses.

Posted 09 Apr 2008 in Blog
  1. Vincent says:

    Exactly ! UK should repeal the town and country planning act, which has made increasingly difficult to build new homes in UK, and put the right to decide the affectation of land primarily in the hands of land owners, under a strict responsibility regime.
    Many intersting studies on this subject can be found at
    http://www.policyexchange.org.uk/Issues/Housing.aspx
    We have similar problems in France, where additional layers of anti-building laws are paving the way for a large housing shortage that drives prices up.

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