Editorial: Trouble on the homefront
Wednesday, July 30, 2008
The housing market could define Gordon Brown's leadership more than any other area of policy. Tony Blair promised education would be his priority; Mr Brown's slogan was not quite "housing, housing, housing" (he preferred some clever-clever guff about "passions" and "priorities") but at the outset he promised 3m new homes by 2020, that environmentally friendly eco-towns would be built, and that the planning system would be streamlined so all this could happen. No doubt about it: he would be the housing prime minister.
All those hopes are now so much dust, thanks to the credit crunch. Housebuilders are either going bust or downing tools, while mortgage lenders are barely lending. Mortgage approvals are down 70% from this time a year ago, according to a report yesterday - which will surely be reflected in sliding house prices over the next few months.
This is bad news for the housing prime minister; but it is terrible for the economy, whose strength he has boasted about so much. That the home-owning British feel wealthier when their houses go up in value may be regrettable, but it is also true. The housing downturn can already be felt on the high street - as it worsens it will keep sending shockwaves through the UK's lopsided economy. A drop in house prices and a calmer mortgage market are vital, as even ministers agree; but a headlong fall in prices and a near-shutdown of the mortgage supply naturally worries policymakers.
The government's interim report on the mortgage industry, published yesterday, is part of Mr Brown's attempt to thaw out the housing market. No other party has tried to tackle the problems in the mortgage market head on. The Lib Dems' Vince Cable is the patron saint of financial re-regulation, but even his policies are a bit thin here. Yet on any list of pressing problems that politicians need to think about, the mortgage drought must rank very high.
Article continues at Guardian Comment is Free
Labels: Gordon Brown, Housing Minister, housing policies, property analysis, property prices, property trends, uk housing, uk mortgage market, US house prices, Vince Cable
