Property market downturn

Deborah McGurran Political Editor, BBC East

The government is struggling to stimulate the economy in its pre-Budget report. The housing market has borne the brunt of the downturn.

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Andrew Tayler is a Senior Partner of Watsons, a 100-year-old firm of Chartered Surveyors and Estate Agents, with six estate agency branches in Norwich and Norfolk.

Here are his views on what he would like to see Gordon Brown deliver.

We are in my third property recession and this one is said to be the worst, although I'm not sure it is because, despite the constant barrage of bad news headlines, property values have fallen only gently and are now at 2005 levels; repossessions have not yet reached anything like the levels in the early 1990's when mortgage interest rates were at 15% and unemployment, although growing and a worry, is still below the levels of that time.

Andrew Tayler, Senior Partner of Watsons

Nevertheless, activity in the residential market remains some 60% below the level of October 2007 and no business can ignore such a change, which is why estate agency offices are closing across the country, including some who opened over the last three to four years.

The October rescue packages for the banks should stabilise the financial market and allow bank-lending levels to improve, although I am not alone in wanting lending to remain prudent and at a sensible percentage of the asset value.

Confidence has been hit hard and it will be some time before both business and the public believe in what used to be the solid stability of our major clearing banks.

Having said that, the one thing history tells us is that as a species we do not learn from the past!

As to the future, I am optimistic that with the rescue package, low interest rates, and in Norfolk continuing growth prospects, sales will improve over the next few months.

It will be slow progress but many of our vendors still need to sell for all the normal reasons, and there are prospective purchasers still willing and able to buy as well as those looking for bargains.

Will it get better?

Yes - but the question is when.

Property is still a better long term investment than cash savings at the moment, although I urge house buyers to buy as a home first and a commodity second.

New house building has all but ceased, thus reducing the available supplies.

There are indications that first time buyers are re-emerging into the market.

The fall in values means that property is more affordable and government is pressing banks to release funds.

Pre Budget Report

The Chancellor is about to issue his pre budget report and can still help recovery in the property market.

A Treasury repossession protocol for lenders may help those in trouble but it seems to lack teeth.

Stamp Duty

The current stamp duty holiday lasts until September 2009 but a permanent change would be welcome.

Ideally the Chancellor should restructure the tax as suggested by the Royal Institute of Chartered Surveyors to eliminate stamp duty on the first £150,000 of every transaction.

Home Information Packs: dismal failure?

HIPS

Home Information Packs have proved to be a dismal failure and of little use to both buyers and sellers, and could be abolished or substantially changed to everyone's advantage.

Tax Relief

There is much talk about taxation changes, and perhaps the Chancellor could even consider bringing back some form of tax relief on mortgage repayments.

Above all else, he must continue steps to ensure the stability of the banking system and ensure that the rescue funding translates into lending to homebuyers and businesses.

The Politics Show East

The Politics Show with Jon Sopel and Etholle George on Sunday at 12.00 GMT on BBC One.

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