Leading article: Don't try to buck the housing market

Share
Related Topics

Anyone who has lived through previous ups and downs in the housing market will find nothing surprising about the pain that housebuilders such as Taylor Wimpey are feeling at the moment. Until this year, it was an unsustainable bubble. Construction firms were always going to be in the blast zone when it inevitably burst.

But to historians, there will also be nothing surprising about the fact that these companies are now lobbying for state help to deal with the fallout. The directors of these construction companies know ministers are as nervous as they are about declining house prices. Such special pleading should, though, be ignored. These housebuilders are private companies that speculated and over-expanded recklessly in the boom. If they are rescued from the consequences of their decisions now, they will have no incentive to behave more wisely in future.

Yet that is not to say ministers should be entirely inactive. There are judicious measures the Government could be taking to alleviate some of the most socially damaging effects of the turmoil in the housing market. This does not mean luring first-time buyers into a falling market by suspending stamp duty, as some have suggested, and it does not mean subsidising housebuilders. The focus should be on helping people avoid the nightmare of repossession and preventing irrational panic.

As the Liberal Democrat Treasury spokesman, Vince Cable, pointed out yesterday, the Government could establish a scheme to allow those unable to make their mortgage repayments to sell their homes to social landlords and remain as rent-paying tenants. Local authorities and housing associations could be given permission to buy unsold private properties to alleviate Britain's chronic shortage of social housing.

None of this should be done without great care. There is a fine line between state action to protect the vulnerable and bailing out the undeserving and improvident. If the Government is to have any chance of success it must be quite certain of what its purpose is. The idea that ministers can bring back the days of rising prices in short order is a dangerous fantasy. The market was grossly overvalued. An entirely natural correction is taking place. The job of the Government is to minimise the social harm of the downturn, not engage in reckless attempts to "rescue" the market.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Software Developer - Newcastle - £30,000 - £37,000 + benefits

£30000 - £37000 per annum + attractive benefits: Ashdown Group: .NET Developer...

Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Digital Project Manager/BA

£300 Per Day: Clearwater People Solutions Ltd: An experienced Digital/Ecommerc...

Creative Content Executive (writer, social media, website)

£30000 - £35000 Per Annum + 25 days holiday and bonus: Clearwater People Solut...

Day In a Page

Read Next
 

The truth about kids on holiday

Rosie Millard
 

August catch-up: Waiting on the telephone, tribute to Norm and my Desert Island Discs

John Rentoul
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home