A 1990s Style Housing Slump

Has anything the government done had any effect on the housing market?

They have taken over banks, raised the stamp duty threshold, lowered VAT to provide a stimulus. The Bank of England has slashed interest rates to their lowest ever levels. And yet, to compare with the slump in the early 1990s, you wouldn't notice that they were any different.

The above graph shows the percentage drop from peak in the First Time Buyer House Price/Earnings Ratio, as provided by Nationwide, for both the 1990s housing market downturn and the current one. As we can see, for all the interventions, money spent and global grandstanding, the HPER is dropping at the same percentage rate as it did when the Conservatives 'did nothing'.

Of course, we'll never know for certain whether it would have been better or worse had the Government not spent all our money buying up the banks, but it seems that the markets are quite happy to continue along on their own path, regardless of government intervention.