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Saturday 30 August 2008

Half a house is hardly worth having

Ross Clark on shared equity schemes

I’m going to start with a declaration of interest. I own a four-bedroom house in Cambridgeshire, in which I have been living for the past nine years. I own no other property, either in Britain or abroad. I feel obliged to say this because increasingly when I read headlines such as ‘Doom and gloom as house prices fall further’, I wonder: has the author got a portfolio of bedsits in Stoke-on-Trent or has he just bought a house in Tooting and is desperately trying to flog his flat in Streatham? The received wisdom that falling house prices are a bad thing is certainly not shared by the public at large. Last week a BBC poll revealed that 28 per cent of Britons can’t wait for house prices to fall — compared with only 22 per cent who want them to rise. The remaining 50 per cent, like me, couldn’t really care less. My house doesn’t get bigger or smaller depending on this month’s Halifax house price index: it will be the same old place whether it is worth £2 million or tuppence.

It is a message, however, which has been lost on Gordon Brown. At the heart of last week’s ‘Queen’s speech’ — delivered by Gordon himself, in desperation, six months early — were measures quite shamelessly designed to reinflate the housing market. He launched a £200 million fund to buy up unsold new homes and rent them to social tenants or sell them on shared-equity deals, and promised another £100 million to help first-time buyers purchase shared-equity homes on the open market.

These are pathetic gestures which will do little to shift the housing market one way or the other. With the average home costing a little under £200,000, £200 million will buy only 1,000 properties — compared with the 167,000 built last year, many of which remain unsold. As with Gordon Brown’s sale of gold reserves at the bottom of the market in 1999, all he will achieve is to make a spectacularly badly timed punt with a bundle of taxpayers’ money.

But more to the point, why is the government trying to buck the housing market at all? Leave it alone and prices will continue their slide. Then, perhaps in a couple of years’ time, first-time buyers will be able to afford to buy themselves entire houses, rather than the half-houses which Gordon is offering them now.

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