Building plan solid but must avoid new boom
The mortgage insurance scheme proposal is far less distortionary than stamp duty or property tax, writes Marc Coleman
Published 18/05/2014 | 02:30
In an article on the property and construction sectors on January 14 last I wrote the following: "2014 is the ideal year to design and implement a thorough seven-year plan to get them back to normal."
Exactly four months later – last Wednesday – the Government came out with a seven-year plan entitled Construction 2020. Its timing (before an election) and content (back to boom/bust?) has been criticised. Certainly the plan isn't perfect. Few are. But a step in the right direction it definitely is. And as for arguments that it could stoke another boom, they are totally wrong.
To see why, think of someone on a crowded escalator in a shopping mall. To get more comfortable they might adjust their posture by taking a single step up or down. But they can't control the speed of the escalator. Likewise governments can change the market with a tax relief or, as proposed now, a mortgage deposit insurance.