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  • Mal McCallion

The 1% (depositors)

Updated: Apr 26


The Government’s latest eye-catching wheeze to ‘fix’ the property market is to underwrite 99% mortgages for those that might otherwise struggle to get onto the housing ladder.


Of course we don’t know whether this will actually be announced in the Spring Budget on 6th March, but the fact that it has not gathered universal disapproval – with polling putting Labour around 20 points ahead in the polls, these small wins will be seized upon by the Sunak Government – makes it highly likely that this is not just another policy that will fail to get past the PR stage.


Previous tinkering on the demand side – Help To Buy and others – has added fuel to house price inflation and made homes difficult to afford. As values rise, more initiatives are required to help those reaching for the elusive first rung of the ladder, further inflating prices and making affordability even more difficult for many seeking to use this help.


The answer to the UK’s housing market perma-crisis remains the same as it did ten years ago – as it did twenty years ago – we need to build more houses. Addressing the supply-side, rather than the demand-side, is of course far harder, longer-term and complex. It involves tackling NIMBYism, generally in the more popular areas of the South East of England, which just so happen to be where the remaining Conservative voters are concentrated.


This, right now, is a million miles away from where the Government seeks to be.


Headlines screaming about “concerting over the countryside” in the Telegraph and the Daily Mail are the absolute opposite of those that the Prime Minister requires, as we go into an inevitable General Election in the next 12 months. As a result, we’re bound to see more of these heavily-marketed – but ultimately futile – initiatives that fiddle around the edges but don’t address the real issue; we do not have enough homes available to buy in this country.


When supply is throttled and demand is pump-primed, we’ll see celebratory headlines in those same newspaper about surges to house prices and the return of a property market boom. Cynical it may be – along with short-term, obvious and counter-productive – but I’d be very sure that this kind of formal announcement, which kicks the difficult stuff even further down the road, is coming in the next few weeks.


We can console ourselves that, at least with the General Election out of the way, 2025 might see some more longer-term policies coming to genuinely help the residential market. Until then, strap in for more eye-catching – but ultimately empty – plans that simply prolong this unbalanced market in 2024.

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