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Why are house prices so high?

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In the ten years up to the start of the financial
crisis, house prices rose by over 200%.

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Why?

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A common belief is that there are too many
people, too much immigration,

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and too few houses to go around.

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This is a myth.

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In fact, during this time for every 4 new
people, we built 3 new homes.

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But at the same time, mortgage lending grew
by over 370%!

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So, where did we find all this money to buy
houses?

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When you take out a mortgage, the money doesn’t
actually come from someone else’s savings.

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No. It’s actually just created, electronically,
by your bank typing numbers into a computer.

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And it’s those newly-created numbers, or
newly-created money, that you can use to pay

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for your new house.

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Since every mortgage works this way, all the
crazy lending before the crisis created hundreds

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of billions of brand new money.
And this new money flooded into property...

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...pushing houses prices up so high.

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Everyone pays more for a place to live, 
which means that,

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after paying the mortgage or the rent, 
there’s less money to pay the bills,

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and less money to spend with businesses and
shops in your town.

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So high house prices don’t make us richer
- they make us poorer.

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Well actually, not all of us –

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high prices and big mortgages mean 
bigger profits for the banks.

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And with an effective license to print money,
this guarantees they’ll lend too much.

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So if we want to keep houses affordable for
ordinary people, we have to look to the banks,

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and together take away their power to create
money, for good.