Governments always look at what their predecessors have done. The 1991-92 stamp-duty holiday helped to stabilise the housing market then, so it is no surprise that the Treasury has been looking at whether to repeat it. This does not excuse the confusion on the issue, which the market needs like a hole in the head.

I suspect the long-awaited housing-market package in the autumn will include a stamp-duty holiday - but the problem it is trying to fix is different from that of the early 1990s, as James Crosby’s recent interim report for the Treasury spelt out. Nearly one in four outstanding mortgage loans in the UK – £257 billion out of £1,200 billion – has been funded by issuing mortgage-backed securities. Those markets have dried up. Lenders are trying to bridge the gap by attracting savings from depositors, but this will not be enough.

According to Crosby, lenders will remain “severely constrained” in their ability to offer mortgages, with severe shortages likely to last until 2010.

The Council of Mortgage Lenders has pressed hard for a solution, by means of the Bank of England accepting new mortgage-backed securities as collateral. Mervyn King, the Bank’s governor, is sceptical; Alistair Darling appears more sympathetic.

Government intervention may not be the answer, but something is needed. Without mortgages, the market is deprived of the oxygen it needs. As long as that is the case, stamp duty will be only a sideshow.

Finally, amid the gloom, we should keep a sense of perspective. For reasons that are not entirely clear, both Nationwide and Halifax are reporting big falls over the year, 8.1% and 8.8% respectively. Other measures reveal a different picture. The FT house-price index, produced by Acadametrics, had prices up by 0.3% year-on-year in July, while the official measure, produced by the Department for Communities and Local Government, showed an annual rise of 0.6% in June. Both series cover a wider range of transactions than the lenders’ data.

On these measures, prices are clearly falling back, but have not yet collapsed – though, as builders will tell you, activity has. If there is no remedy to the three-year squeeze on lending, however, the current differences in house-price measures may soon prove academic.

+ home.economics@sunday-times.co.uk

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