Author(s): Fred Harrison

Business

Updated 2nd Edition In the two and a half years since the first edition appeared, events have unfolded as predicted. In 2005 the consensus among forecasters was that the boom in house prices would cool to an annual 2 or 3% rise over the following years. In fact, in keeping with the 'winner's curse' phase of the cycle described by the author, prices have risen by more than 10% per annum. The author reveals that the government's monetary policy only has a marginal impact on land speculation, but as the Bank of England raises interest rates to curb house price inflation, the main victim is the first-time buyer and the productive economy, especially small businesses. The only way to neutralise the boom bust cycle is through a reform of taxation, he claims.