As Caroline Flint, the Housing Minister, strode along Downing Street this week, she put on show private Cabinet papers that predicted a property price fall of 5 to 10 per cent this year.
The publication of this forecast - along with the assurance that the Government would be “on people's side” throughout the expected downturn - was seen as accidental.
Except, that is, by those who argue that Ms Flint wanted the details to be revealed, as she could have so easily popped the papers into her roomy handbag before she passed the posse of photographers. Miscalculation or conspiracy? Will Ms Flint's slouchy handbag become as famous as the sharper-edged style of accessory favoured by Margaret Thatcher?
Whichever theory you subscribe to, you will be concerned by the simplistic assessment of the current housing market conditions that emerges from the papers. Ms Flint and her colleagues continue to believe, in face of evidence to the contrary, that the Treasury's £50 billion bail-out of the banks will make mortgages more plentiful.
They are also placing great faith in Wednesday's (intentional) announcement of extra cash for the purchase of unsold homes. There will also be some money for the extension of shared equity schemes to all households with earnings under £60,000, although the amount of money involved will only help around 775 first-time buyers.
Inflation is rising, making rate cuts less likely and, according to Mervyn King, Governor of the Bank of England, “the nice decade is behind us”. The credit crunch has raised the cost of borrowing for housing associations, the bodies that operate the shared equity schemes on which so much hope is now placed. Yet the Government still thinks it can turn back time.
Fortunately it seems that most homeowners take a more sophisticated view of events, though they may regret the passing of the nice decade, with its easy money. The vast majority are staying put, declining to panic and are not overwhelmed by their debts: the latest figures from the Royal Institution of Chartered Surveyors (RICS) show few distressed sellers. There are no signs of a repeat of the conditions of the not-nice early Nineties, when the debt-burdened rushed to sell.
RICS's estate agent members bemoan the mortgage famine but do not appear to see government intervention as the solution to this or any other of the market's woes. This may be because they have witnessed the problems caused by home information packs (Hips), which were promoted by the Government as a panacea for all the travails of buying and selling homes and also as means of promulgating a deep green sensibility among fossil-fuel profligate owner-occupiers.
The tougher enforcement of the Hip rules, due in June, has now been delayed until the end of the year, a tacit admission that the scheme has not been a resounding success. A sizeable stamp-duty concession for first-time buyers would be one measure that could cause homebuyers to overlook Hips and other dubious ventures. Maybe the papers outlining this are hiding somewhere in Ms Flint's handbag.
REPOSSESSION DRAMAS
The final chapter in the tale of a repossession is usually played out in an auction room. The individuals who have abandoned the fight to keep their homes cross their fingers in the hope that the bidding will be brisk. Mortgage lenders can pursue borrowers in arrears for any shortfall between their loan and the proceeds of the sale. The threat of such action lasts for 12 years.
Many of those who are repossessed are coping not only with the loss of their home but also the ending of a marriage or the collapse of a business. A survey from Moore Blatch, a firm of solicitors, indicates that 34 per cent of repossessions result from the breakdown of relationships. Another 25 per cent arise from the closure of a family company.
Given that about 45,000 repossessions are forecast this year, there will be many such dramas. Already repossessions account for around a third of the lots at some auctions, up from just 10 per cent at the beginning of the year.
But the proceedings are not always unfolding along the normal plotlines. Properties that do not sell are not always failing to find a buyer as bargain-hunters are closing deals in private once the auction is over, as we report on page 7.
It also seems that air of the auction room is having the power to excite some purchasers in a way that no picture of a property on a website, or in an estate agent's window, can equal.
A former doctor's surgery in Parson's Green, a chic part of southwest London, had lingered on the market for four months until it was put into a Savills' sale on Monday this week.
Previously such features as the smart neighbourhood, the property's closeness to a park, public transport, and the bars and the cafés had been overlooked. But suddenly these attractions and the option to convert the building into residential use seemed the most thrilling proposition, causing 90 people to view the place.
Amid bidding described as “frantic” by one onlooker, a seasoned observer of such events, the former surgery went under the hammer at £318,000, considerably more than the guide price of £220,000. Ahead lies a revamp that will turn it into a pad fit for some junior hedge fund manager.
This property was not the subject of a repossession, but its change of fortune would be the story's end, of which many of those who will lose their homes this year can only dream.
Slight contradiction in the article...'and are not overwhelmed by their debts'....if you look just a little further down this page there is an article titled cry for help from debt ridden middle class. I tried posting this observation a couple of days ago, lets hope this one gets through.....doh
dan, nz, nz
There's nothing frantic about property from Northampton that come up for auction. If anyone bids at all for a property they normally don't make the reserve or the property is bought at 35% off the current market price.
Simon B, Northampton, UK
Just give it up Ashworth. Spend more time with the grandchildren or something.
Matthew Brook, DORCHESTER, United Kingdom
Labour has allways been a disaster for investore whether it by misfortune or mismanagement the facts now again speak for themselves.
JJ REGAN, LONDON, UK
Shared equity by god what an absurd piece of reverse socialism.
Yes Yes Yes i am on the ladder at last, alas the property is really owned by the banks and the government who are becoming interchangable. I do not want my taxes spent on 'helping' someone onto the nightmare that is a property bubble
Mark, Epping, Essex
Only house prices falling back to sensible levels, affordable by borrowing no more than 3 x salary, will help homebuyers. So stop the bailouts and let the market decide the true value of housing.
Paul, Coventry,
Check the VT of that day - all other ministers, male and female, carried their papers between smart folders.
On other occasions Flint's used red ministerial box - made of wood, lead lined (a throwback to if needing to throw in ocean to sink), X-ray proof: £50K spent on new batch of them in 2006.
DS, Manchester, UK
The auctions I've watched recently have left at least 2/3 unsold. Unrealistic price expectations are stopping properties selling.
No one seems to accept that AFFORDABLE needs to mean cheap. Affordable shouldn't become a byword for buying 1/10th of something.
Edina , Oldham, UK