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Politics driving ‘feel-good’ house price rise – analyst

  • 18/09/2013
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Politics driving ‘feel-good’ house price rise – analyst
The government is using rising house prices to boost public sentiment in the run up to the next election, an analyst has suggested.

Standard Life multi-asset investments head of global strategy Andrew Milligan described the Royal Institute of Chartered Surveyors’ call to limit house price inflation as “beautifully timed”.

He said: “The government is trying to create a feel-good factor in the run up to the election. I think there’s no doubt about that.

“Is a bubble brewing? Potentially, but that comes back to questions about forward guidance and macro prudential regulation.”

It also depended on whether government policies could trigger more house building, he added.

Research by Capital Economics earlier this year indicated a government’s chance of being re-elected was closely linked to house prices. It described the Help to Buy scheme, announced by George Osborne (pictured) in the Budget, as a “political coup”. 

Last week, RICS urged the Bank of England to consider capping house price inflation at 5% per year. 

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