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UK property sales drop to 50 year low

Butterfly economics

An article in today’s Guardian refers to RICS figures which show that house sales have dropped to their lowest level since 1959. In the absence of land value taxation, house prices are sticky downwards, but due to the interaction of the banking system and the land market, they always overshoot when the trend is rising. This drives the boom-bust cycle. When the country’s economy is dependent on a never-ending increase in house prices, this is a recipe for major economic crises, which have been turning up on shedule, every 18 years. The present one has a long way to go yet. The way to damp down the cycles and break the damaging link between the housing market and the wider economy is to introduce land value taxation. If moves to get it in place were initiated immediately, the economy would quickly bounce back from recession. Otherwise, it will be prolonged and the vacant sites will be host to crops of sturdy buddlieas before things turn round, which will be good for the butterflies. Is anybody listening? Certainly not the likes of David Blanchflower, who keeps arguing for lower interest rates, a recipe for big inflation. Read the article here