Real wealth is in properties.

In order to stimulate growth in the economy the British Chancellor of the Exchequer, George Osborne has made loans cheaper for house buyers. Buyers will get this help for houses costing up to 600,000 pounds, which converts to Rs 60 million or 6 crores. House prices have been soaring in Britain, especially in London and the south, so that young people are unable to enter the housing market. They are forced to pay rent, which rises with rising property prices, so that they are unable to save enough to put down a deposit to buy their own properties. Apparently house prices will continue to rise till 2020 and even middle-income earners will be forced out of the market. Some are comparing the present situation to the time of Charles Dickens which is a great irony because the present Conservative government is undoing the work of Margaret Thatcher, the undisputed Tory heroine. What is happening in Britain is similar to what has happened in India in the last 10 years under the Congress. Properties have become so expensive that only the very rich with vast amounts of black money can afford them. In a repeat of feudal times the rich are becoming land owners while the poor are reduced to scratching a living with ever rising prices. In other asset classes, such as shares, people stop buying when prices reach a certain level and others book profit. But property prices in India do not go down even when ordinary people cannot afford such prices. When trillions of rupees are earned through corruption the money finds its way into properties so the only way to eliminate black money would be to bring down prices. Politicians will never allow that but it may happen anyway. A report in the Wall Street Journal shows how Mr Robert Vadra used his connections to the Gandhi family to buy land in Rajasthan which went up 6 times in value as the government announced a solar energy project. Bundles of cash were paid out from the back of a SUV to brokers to buy the land. As interest rates start to rise in the west the Reserve Bank will also have to raise rates in India. At some point loans will become prohibitive and prices will crash. To take black money out of property state governments have to reduce stamp duty and registration charges. In Britain stamp duty goes up from 1% on houses costing less than 500,000 pounds to 7% on those costing over 2 million. This has been labelled ' vindictive ' tax. In India stamp duty can reach 12%. No one wants to pay such high taxes so they will pay in black. Poverty will come down only when people own their own homes. Simple.