The Government should be doing more to help ease the problems in the property and mortgage markets, according to the Royal Institute of Chartered Surveyors (RICS).
The situation in the property market is worse than feared, with the bank of England recording July as having the lowest level of mortgage
approvals for new home purchases since records began in 1993. RICS
, and other housing groups, are calling on the government to encourage lenders to drop interest rates, making mortgages more attractive to home buyers.
Mortgage approvals fell to 33,000 in July, considerably less than the average 55,000 a month that was recorded for each of the previous six months, and down 71.1 per cent on July 2007 figures.
House prices have now lost more than 10 per cent of their value compared to this time last year, according to a number of house prices indexes including Halifax and Nationwide, and further falls are expected in the coming months.
And, economists are still not expecting the Bank of England to cut interest rates this week when the Monetary Policy Committee (MPC) holds its monthly meeting. Rates have been held at five per cent since May.
According to RICS, "a combination of measures must be put in place looking at fiscal and financial issues," to fix the problems in the housing market. What's needed are "new models for home ownership, availability and affordability of homes, consumer information and regulation and standards".
It emphasised how "It is essential that the Government takes this opportunity to kick start the housing market and at the same time introduce long term reform that will benefit all those involved in property including renters, letters, buyers and sellers."
RICS urges the Government to ease liquidity in the mortgage market by offering new incentivised mortgage backed securities and covered bonds, similar to the current Special Liquidity Scheme, with a particular emphasis on helping first time buyers.
It recommends that a Government-supported tax free savings account be set up for first time buyers to help them save up for a deposit, and that a 'holiday' should be introduced on stamp duty, something which the Government has announced today that it will be implementing.
In order to prevent repossessions, the Government should encourage Residential Social Landlords to offer 'mortgage rescue schemes', which would see them buy a share in a home that is being repossessed and therefore allow the current occupier to continue living there.
RICS added that "Action should not just be aimed at addressing the immediate issues but must also establish a more efficient, sustainable property market with more effective information and better protection for consumers."
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