» Tuesday, May 13, 2008

Housing Market

Asked if the discussion included anything on the housing market, the PMS confirmed that there had been some discussion of the housing market as well. Asked what the tenor was of those discussions, the PMS replied that because of the international credit crunch, mortgage availability was becoming more difficult, so this was a supply issue. It was therefore very different from the situation for example in the early 1990’s, when because the economy went into recession and unemployment was very high, there was an issue around affordability. The issue in relation to the housing market now appeared to be very much on the supply side of the market and that was why the Chancellor, working with the Governor of the Bank of England had taken action to increase liquidity into financial markets in order to ultimately make it easier for people to get mortgages.

Put that a Government briefing paper had said that the housing market could lose up to 15% this year, the PMS said he would not comment on leaked documents. The key thing was that the Government did everything it could, in order to demonstrate and to act on the side of people who are affected by this. We saw for example, the announcement last Friday that Caroline Flint had referred to in Cabinet that morning; to make it easier for people to get legal advice should they be affected by repossessions.

The Prime Minister had talked about increasing shared equity to make home ownership more affordable for many people and no doubt there would be more announcements to help people affected by what was happening in the housing market in the weeks ahead.

Asked what the Government’s view was on the housing market, the PMS replied that the Government’s view would have been set out by the Treasury in the Pre-Budget Report, where they took a comprehensive look at what was happening in the housing market, as they did in the rest of the economy. We didn’t provide daily public commentaries of what was happening in the housing market and he was sure the Treasury would provide their next assessment in the Pre-Budget Report.

Asked if a fall in house prices was something the Government welcomed, the PMS replied that it was a market. Therefore, the price is determined in the market, so it was not for the Government necessarily to take a view one way or the other. What the Government could do was to do whatever it could for people affected by changes in house prices. That could be when house prices went up and the Government could help people facing problems with being able to afford buying a house, which was why the Government had introduced shared equity schemes. It could also mean for example when people were facing difficulty paying their mortgage and that was why the Government made an announcement last week on helping people affected by repossessions.

original source.

Briefing took place at 11:00 | Search for related news

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