item0039A  690, 691

But the evidence suggests that it will not happen.  Having spent years, as a younger man, as a happy house-builder for both Bovis and Barratts, I like to think I understand the UK housing market.  In the UK, the phenomenon of home-ownership is quite distinctive, and there are no easy parallels with any Continental system.  I had to confront some of these differences when I was despatched by Bovis to establish a house-building subsidiary in France in 1971, working with Anthony Vincent.  The attempt did not succeed - because we did not really understand the character of the French housing market.  At that time, the massive US house-builders Levitts were also trying to do the same thing.  And they failed as well.

Let me summarise the key characteristics of the UK market.

• Building Societies  No other society made the historic Victorian move into the positive promotion of home-ownership, with fiscal incentives and statutory advantages - they have been institutionalised promoters of homeownership;
• Class  Homeownership has always carried a class connotation in the UK - homeownership has been a "middle-class" phenomenon, a symbol of rising up the class ladder - "I suppose we're middle class now..." - and by contrast, rented housing carries a lower-class connotation which is missing from Continental societies;
• Early purchase  First-purchasers are much younger than in France or Germany, where home-purchase sends messages to the community that the buyer has finally "set down roots" in a specific community - there is far less buying and selling of owner-occupied housing;
• Housing market  Nowhere else is there a housing "market" on the scale of the UK - a much higher proportion of owner-occupied are transferred by family gift or inheritance, rather than sale - nowhere else is there a high-powered "profession" (the Chartered Surveyors) dedicated to making a market in all property, including residential property.

And the consequence is...  House-purchase decisions are short-term, particularly for younger purchasers.  Mortgage finance decisions are short-term, and purchasers are always trying to find the best possible current mortgage deal, secure in the knowledge that in  a lively market-place a change-of-course will be possible, if circumstances change.  With a dwindling rental market, the younger generation is forced into home-ownership at an early age, buying small houses which they have every intention of re-selling.  Young married purchasers plan to buy a larger house "when the children come along".  Indeed, some purchasers clearly take advantage of the lively UK market to accumulate personal wealth, by improving and re-selling the houses they occupy, helping them to move up both the income- and the social ladder.

In such a market, long-term fixed-interest mortgages are simply unattractive.  They are - inexorably - more expensive that flexible-rate mortgages, and that difference is normal.  It is possible that, for a purchaser changing houses at the age of 40 (for example) the security of a fixed-interest 20-year mortgage, so that the family "knows where it is" for the remaining twenty years of working life.  For that predictability, the customer may be willing to pay a higher price - and the market should certainly offer that option.  Indeed, such mortgages are already available.

• The Government should be wary of any attempt to become a "market maker" - in a market which is already the most sophisticated in Europe.  Gordon Brown should bury this project - at the earliest opportunity.