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I was always a firm believer that house prices should have been capped well before the bust, but the Government attitude was that they would or could not interfere in the free market (we know why).
This despite the fact that the selling price of houses bore no relationship to the cost of building them.
We can now see the results of government inaction, negative equity, abandoned houses etc.
By the same token I now believe that the same is happening in reverse and the sale prices of houses are dropping to a level below what it costs to build them.
Because the government did not interfere in the market when house prices were rising too swiftly is all the more reason why they should interfere in the market and put a floor on the price of houses now. Unless this is done, prices will drop to an unrealistic level and nobody will buy, waiting for prices to drop even further.
If the Government steps in and does that now, I believe the market may pick up again because at the moment the market is in limbo.
This could be a win-win situation.
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