Kirstie & Phil's Property Guide: Index Property Guide: Carlisle & Bath

Date Published:

18/07/2008

With house prices falling at the fastest rate in 16 years, mortgage levels falling by 56 per cent and available mortgage products falling by 76 per cent, we all want to know what the government's Housing Minister has to say about the situation with the property market and house prices.

Kirstie and Phil interviewed Caroline Flint to find out...

Kirstie: Our economy is based, perhaps more than any other in the world, on our confidence and the value of the roof over our heads - and right now, it feels a bit rudderless, that everyone is in crisis and depressed about it. What can the government do to restore confidence?

Caroline Flint: Clearly, what we have to do is recognise where we are now, which is very different to a year ago. We are looking at what we can do to help the housing market at the moment.

Kirstie: How many people do you think the hundred million pounds that the Chancellor has put into the shared equity scheme can help?

Caroline Flint: Well we've helped around 110,000 people over the last few years, we're looking to help another 75,000 in the next few years as well - and I've announced some expansion to our programme for this year.

Phil: The number of houses being built is a really difficult one in the market at the moment. Target of 60,000, reality of 40,000... how do you see that panning out?

Caroline Flint: I look at the same statistics as everybody else, and clearly there's a slow-down, regardless of the credit crunch. We have had an undersupply of housing in this country - for me that has contributed to the high cost of housing. I’m thinking of ways in which I can stimulate that market - to, you know, get builders building. Thinking about giving them some more money for their up-front costs, for them to build affordable housing, to get their cashflow going.

Kirstie: The government has come up with £50 billion, and yet we still aren’t in a position where the base rate and the actual average interest rate that you get from the lenders have got any kind of parity at all.

Caroline Flint: We could always ask for more, but it is complicated. I think people obviously had expectations that the £50 billion from the Bank of England would immediately result in interest rate cuts; the reality was that the inter-bank lending, that actually creates the processes that create the products for people to get on the property ladder, had seized up.

Phil: What are the banks doing? Are they doing enough?

Caroline Flint: Maybe there’s something out of this that is going to give us a more sustainable approach to both house building and lending. I wouldn’t have wished the credit crunch on us, I would like to put that on the record, but maybe sometimes out of adversity you can get some discussions about a different way of doing things.