Wednesday, 3 September 2008

Don’t panic, the housing market is saved!

You will have seen that Gordon Brown gave the housing market £1.6bn. Well, not quite, he announced a package of measures to boost the collapsing housing market. Oh great, ‘a package’ and we all know what that means!

The Organisation for Economic Co-operation and Development didn’t think it would help one jot and cheerily claimed we would be the only major world economy in recession this year.

George Buckley, of Deutsche Bank, appears to share these sentiments and was reported in the FT as saying the government could not hold back “a strong undercurrent of negative sentiment” in the housing market.

The prime minister for his part insisted that his package would help a “resilient” UK economy withstand the global downturn.

What is the package? Other than a one-year stamp duty holiday on house purchases of up to £175,000, which doesn’t help anyone within or close to any of the country’s capital cities (the majority), there are additional shared-equity schemes with developers. This does not of course mean the government will actually ‘buy’ £1bn worth of housing. Indeed, Downing Street was unable to even say where the money would come from to fund this rescue package.

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