Calls to rescue UK housing market

Prime Minister Gordon Brown is under pressure to follow in America’s footsteps and rescue the British housing market. Already, the US government’s bailing out of its largest mortgage companies Freddie Mac and Fannie May has upped share prices around the world. It is hoped the British government will learn from the American example and aid the ailing housing industry. A Treasury review lead by City banker Sir James Crosby is being held to analyse how the housing market is financed and whether the government should provide backing funded by the taxpayers for mortgages running into the billions. With reports of home sales at their lowest point for 30 years, according to the Royal Institution of Chartered Surveyors, the report can come none too soon for many concerned about the state of the market. The RICS’ study revealed that prices picked up slightly for the fourth month in a row, but still were down sharply compared to a year ago. The continued shortage of mortgage funds is said to be ‘stifling’ buyers. ‘A lack of mortgage liquidity is the key issue that is keeping the housing market from showing any real sign of recovery,’ says RICS’ spokesman Jeremy Leaf. ‘While money is scarce, many will continue to be denied the next step on the property ladder. The Government’s Stamp Duty policy will not be enough to kick-start transactions,’ he added. The Nationwide Building Society also has gloomy predictions, with house prices expected to fall by 25% from their peak last autumn and signs of recovery not anticipated until 2010. RICS also reveals that the average estate agent in the UK sold just 12.7 properties in the three months to the end of August, with sales running 47% lower than in August last year. Some optimism is to be found in the RICS’ report, however, with the number of agents reporting a rise in new instructions only slightly outnumbered by those expecting a fall.