UK Property Market: Throwing Money at the Problem not the Answer

CEO of look4aproperty.com Aaron Turner has urged the government to accelerate quantitative easing and "put more money into the housing market."

In a press release, Turner said that "Money needs to be put into the economy in much larger amounts and not in dribs and drabs of £2b at a time.

"It's totally inadequate. I would say the Government needs to inject at least £300- £400 billion and in much larger blocks to really get the economy moving -- the £75b they have pledged might not be enough to be noticed."

But perhaps Turner's biggest gripe was that too much of the inadequate amount of money being channelled into new lending was going towards lending to businesses and not enough to ordinary homeowners.

While "this will help, because it could slow job losses and aid British businesses," he said, but "the amount of money is still too small and more money needs to go into the housing market.

"People need to remortgage and buy properties -- and once they can do that they will start buying on the high street again," Turner concluded.

I think this is a terribly over-simplified view; to simply throw more money at the problem will do nothing to bring us out of recession any quicker.

If the employment situation doesn't improve the amount of money available for mortgages will be irrelevant because hardly anyone will be applying for mortgages; you don't buy a house or very much from the high street if you haven't got a job or have but are in danger of losing it.

The truth is that every little bit of the economy needs equal repair efforts: employers in trouble need finance to help them keep avoid too many job losses, small businesses doing well need financing to expand and create more; and the economy as a whole needs to be brought out of recession before people will be considering buying property in any real number again.

Only then will the amount of money available for mortgage lending be the main factor in bringing recovery to the UK property market. It is easy for us, with a vested interest in the property market to think it should be the focus of the government's efforts. In reality they are right in attempting to bring the economy as a whole out of recession, or at least slow its descent deeper into recession, with their efforts to turn the property market round being only one arm of that effort.