Safe as houses?

After much speculation ministers have unveiled plans to ease he pain of the ailing housing market.

Amid what the experts have referred to as ‘tinkering’, using tools such a year-long holiday for stamp duty on a fifth of homes currently on the market, a role has also been identified for councils.

These measures are designed to help ‘decent’ people, to use the communities secretary Hazel Blears’ expression, struggling to buy for the first time or struggling to keep hold of their properties.

Indeed, the measures could help some people stay in their homes during these difficult times... first time buyers may continue to think twice, though.

But the Local Government Information Unit thinks more can be done, and urges councils to be ‘imaginative and bold’ in providing support for mortgages.

It cites examples such as Liverpool City Council’s plans to act as a guarantor for mortgages.

Commendable as this may be, one can’t help thinking that there is a worrying sense of the inevitable about all this.

House prices are still over-valued in this country and some commentators have been claiming for a while now that a correction is needed –the full expression of market forces, if you like.

A year or so ago, many were predicting a gentle fall in the market and not a repeat of the 90s crash. A lid would be kept on interest rates and unemployment would remain strong, they said.

What they didn’t account for would be the sub-prime lending crisis and the subsequent shrinking of the mortgage market, and energy and food price hikes. Now, employment in this country looks less certain.

So, with this cocktail of conditions, a correction seems inevitable, particularly when financial institutions have closed their doors to customers to let their burns heal.

One can hope there won’t be a crash, but how much should councils get involved with ameliorating the effects of an ailign housing market that ultimately they cannot control?