23.5.05

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Government will put taxpayers’ money towards purchase by first-time buyers, and buyers will put in some of their own money. More money will enter the market to boost the demand, but without a matching increase in supply. That means higher prices. The real need is to free up the market in housing by allowing homes to be built where people want them.

The new policy might suit the Treasury's objectives by encouraging people to borrow more and keep the economy in apparent boom, but it will push up house prices, taking them further beyond the reach of the next round of first-time buyers. It will also put more people in thrall to the government, which might also suit their objectives.
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