The Chancellor's budget revealed yesterday contained several very promising measures aimed at stalling the UK house price freefall and kick-starting recovery. But the truth is that the housing market cannot recover without a wider economic recovery; sufficient numbers aren't considering buying a home while millions are unemployed and millions more in fear of their jobs.
So the question property professionals should be asking today is not so much: will Darling's measures aimed at the housing industry work? But rather: will Darling's budget bring a swift recovery to the wider economy so that his housing measures may have their full effect.
For instance: Darling extended the funding for the shared equity HomeBuy Direct scheme by £80m. Under this scheme the government can loan up to 30% of a home's value to first time buyers or other eligible parties, which can be used as a deposit in order to get a good mortgage deal. But unless the employment situation improves the additional funding will hardly be needed.
It is therefore hoped that Darling's economic spending such as: the £750m Strategic Investment Fund to help emerging technologies and regionally important sectors, will work in conjunction with the £250m to help people get work experience in growth industries, to create new jobs, which the £1.7bn of additional funding for the Job Centre Network will ensure are quickly and efficiently filled.
Darling also announced government backing for mortgages, and £500m to kick-start stalled developments, which will increase housing supply as well as saving and providing construction jobs.
If (dare I say when) it all comes together, increasing and secure employment will mean more people looking to buy homes, government securities will mean mortgages are more available when they do, and the HomeBuy and other shared equity schemes will solve the problems with raising a deposit for those in newly secure employment, and the £500m will have ensured there are plenty of homes for them to buy.
However, by Darling's admission 2009 is going to be a rough year for the UK economy, worse than any year since the great depression of the 1930's, so none of those things are going to happen until, at best early 2010, more likely mid 2010. That said: for 2009 it is a case of battening down the hatches and weathering the storm; it may well get worse before it gets better.
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