It’sd good news for the Oppositon every time Caroline Flint comes on to the radio and television. Her insouciance to the parlous state of the housing market and her bland reminder than many of us are not about to lose our homes to repossession is allied to a strange silence about housing finance that saps confidence in the government more. It’s bad news for the country that such a crucial part of our economy and markets should be dealt with like this at this critical stage.
I blogged earlier in the year forecasting further heavy declines in housing prices. These are now all too obvious in the monthly and annual figures, as the rises of last year drop out of the yearly stats. I have also pointed out that Ms Flint argues a contradictory case, telling us on the one hand that house prices are the result of supply and demand for new homes, and on the other that in the middle of a crash in new homes prices we need to up the build rate! Her urging more new homes has all the force of Canute telling the waves to go back during a rising tide, as builders cut back in response to the drop in demand.
We also now have her telling us that cutting or suspending Stamp Duty is an option, when in the marketplace uncertainty about the government’s intentions on Stamp Duty is understandably persuading even some of those who can still afford to buy a house to hold off to see if the tax is going to be abated.
If Ms Flint really wants to help the housing market she needs to take actions that would help stabilise prices. It is difficult getting the building industry to increase its build rate all the time prices are falling, and all the time prices are falling it will depress sentiment and drive more people into negative equity. She could, for example, cancel the hated Home Information Packs, agree and announce lower Stamp Duty, and talk to the Chancellor about easing liquidity in money markets more to help with the supply of mortgages.
If she is unable or unwilling to do any of those she would be better not interfering and expressing an opinion – unless her aim is to help the Opposition!