Doom and Gloom: Credit Crunches, House Prices and Alternative Living...

Who is up for buying a tent to live in?

Some of us are old enough to remember the recession of the early 1990s -- negative equity, repossessions, feelings of guilt on the part of those who bought property at auction (so they claimed...). And, as is the case given the circular nature of things, here we are again on the edge of that singularly depressing precipice, or so some commentators would have us believe. Last week, we saw banks closing mortgage applications to new customers, removing competitive deals after being inundated with applications, or putting up interest rates to limit the numbers applying. Another strategy being adopted is offering mortgages only to those who are able to raise between 15 and 25 per cent of the value of the property in a deposit.

Then as now, banks were chastised for lending to individuals that were viewed as high risk, with banks lending far more than individuals could realistically afford to repay, and mortgages over longer repayment periods than one might have expected (i.e. in excess of five times the salary of an individual with repayment over periods in excess of thirty years). In addition, there appear to have been a number of good deals that people have taken out without really thinking about how they would make their repayments once the period of that deal had expired. Last year I was discussing a mortgage at a building society in the town where I work and after we had calculated my budget, she informed me that some people were asking for sums of money that would leave them with a residual monthly income of double figures. Disaster waiting to happen.

But then, I suppose you could use that phrase to characterise our current predicament. It has been apparent for some time that first time buyers were simply being priced out of the market, that demand for housing (especially in the South East) far outstripped supply and the government has, for all its rhetoric, simply ignored this issue. I'd find it incomprehensible that where considerable numbers of people simply cannot afford to buy something as basic as a roof over their head, for the consequences not to be quite severe. It would be ironic indeed if come the next general election, we were deep in recession with many people suffering as a result of this economic downturn, and for Gordon Brown former Chancellor extraordinaire, to be ousted. Given that he has effectively ignored the housing problem for so long while he was (and still is) running the country's finances, who else should take the flack?