Yet there is no real prospect on any early assistance from the authorities largely because inflation, on the Consumer Prices Index (CPI) measure, is on course to approach five per cent over the coming months.

Indeed, the most interesting aspect of the no-change vote at the latest meeting of the Bank of England's Monetary Policy Committee is how many members supported the case for an immediate rise in interest rates – and whether they will hold the majority position at the next meeting.

Turning more specifically to the housing market, the news has been equally grim with little immediate relief in store.

The latest RICS survey does provide some tentative evidence that activity may at last be close to finding a floor but with mortgage approvals running at about only a third of last year's level, this on its own provides little cause for optimism. Against a backdrop of rising unemployment and a continuing squeeze on mortgage finance, any
pick-up in transactions from current levels is likely to be modest in the near term.

Rumours have been circulating that the Government is contemplating measures which could help to shore up the collapse in housing market activity.

The first of these measures concerns an overhaul of the stamp duty system involving some kind of deferral system, or even a holiday on stamp duty.

Of the two options, the RICS favours a stamp duty holiday as part of a more wholesale reform of the stamp duty regime. We recognise that this is no silver bullet to re-invigorate the residential sector, but see it as being broadly helpful at the margin particularly if measures are also introduced to help to bolster the availability of mortgage finance.

Comparisons with the stamp duty holiday of the early 1990s, which was not an overwhelming success, are not wholly appropriate. On that occasion, the economy was in the midst of a deep recession with unemployment rising very sharply. This time around, the economy is only just entering a recession, unemployment remains very low despite recent increases and our evidence suggests that there is still some appetite for appropriately priced properties.

The RICS is also concerned that the failure of the Government to act could ultimately lead to more pronounced medium-term problems. Housing starts in England in the first quarter of the year fell sharply and recent surveys suggest that they are heading significantly lower over the coming quarters; for the whole of 2008, housing starts could drop below 100,000.

That perception is consistent with anecdotal reports of housebuilders mothballing developments and laying off workers. Meanwhile, the National Housing Planning Advice Unit (which advises the Government on housing needs) continues to believe that something up to 3.5 million new homes are required between now and 2020 to meet population growth.

Against this backdrop, the likelihood is that when confidence returns as it inevitably will at some point, the pressure on the existing housing stock will rapidly build, sowing the seeds of the next bubble in property prices.

To counter this, action needs to be taken that helps soak up some of the inventory overhang of new build properties and encourages housebuilders to start building again. Stamp duty reform is part of the answer, as is planning reform and a greater role for housing associations as lead developers on projects.

The current system links Government housebuilding closely to private sector development activity through section 106 agreements, where builders are obliged to build a certain percentage of social housing before planning permission is granted, typically 25 per cent. Moving the building of social housing away from such close linkages to the property cycle could provide a more sustainable solution to the longer term needs on improving the housing stock and increasing the long-term delivery objectives. Lower base rates may also help, but the risk is that early action to ease could be counter-productive, particularly if such action is viewed as a sign of weakness from the Bank of England. Indeed today's inflation figure at 4.4 per cent – double the Bank of England's target – has raised the possibility that rates will stay on hold for longer to quell any likelihood of second round effects of inflation taking root through wage negotiations.

Our suspicion is, however, that the authorities will feel in a position to begin responding to the worsening economic climate by the tail end of the year.

Oliver Gilmartin is a senior economist at the Royal Institution
of Chartered Surveyors (RICS).