Painful though it was, the appropriate solution was to stick with the depreciation in the housing market, cut interest rates as far as possible and go for growth in manufacturing, Mr Bootle said.
'The various calls for special measures are part of the problem, not the solution. For the whole of the post-war generation we have been obsessed in this country with housing. We have poured too many resources into it.'
A culture had been created which was essentially the equivalent of getting rich by taking in each other's washing - 'namely buying and selling each other's houses', Mr Bootle said.
While he believed measures could be devised to address particular hardship cases, Mr Bootle went on: 'What I am against is blanket measures for the housing market as a whole, which gives exactly the wrong message - which says that you cannot lose in housing for if the housing market goes down the Government will bail you out.'
John Wriglesworth of UBS Phillips and Drew, another investment house, told the meeting that probably nearly 2 million people were now in the 'debt trap' with mortgages greater than the value of their homes. He repeated his suggestion of a pounds 3,000 lump sum grant for buyers to give a temporary kick start to the housing market.
'If we want to get the economy going, I think the housing market is a suitable market to target and perhaps even to interfere with,' he said, adding that, left to itself, the sector would not significantly recover until 1994.
Several participants indicated at the start of the session that they were victims of negative equity. One of them, Lynne Armstrong, a south-coast councillor, said she was trying to let part of her large derelict house to a repossessed family. She had planning permission for converting the property to 10 flats but had missed the market, she said.
Tim Melville-Ross, chief executive of the Nationwide building society, said he had just been lobbying a minister to persuade the Government to introduce a mortgage benefit scheme, but he was against a bold rescue scheme. The supply side measures of the Autumn Statement, together with lower interest rates, could lead to early stability in the market and a gentle recovery, he suggested.
Aligning himself with other speakers, Mr Melville-Ross said negative equity per se should not interfere with the market. Mechanisms could be devised with lenders to move negative equity from one property to another, which should resolve the problem for existing home-owners, he said.
However, Mr Melville-Ross said there were structural deficiences in the market that called for a root and branch review of the fiscal arrangements attached to housing. He favoured the phasing out of mortgage tax relief.
The money could be more effectively spent and enable people to make more rational choices in housing which had nothing to with the type of tenure, he argued. This could improve the mobility of labour and thus the efficiency of the economy.
Mark Boleat, director general of the Council of Mortgage Lenders, was similarly against any 'bold imaginative government plan' to get the housing market going. It would recover, but it was going to be 'a long slow job', he said.
'We are going to get a million transactions this year. The difference between a very depressed market and a reasonable one is another half a million transactions,' Mr Boleat said.
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