Gazumping our way back to greatness: The housing market was built on a peculiarly British, and temporary, fantasy. Yet faith in its powers is undeterred

The flowerbeds are spattered with crocuses, pink blossoms cloud the cherry trees and, in cramped offices, the middle classes nervously eyeball estate agents over smudgy sheets of photocopied A4. Spring, 'the buying season', is almost here.

But this spring the tension is almost unbearable. Will they, won't they? Will the primal house acquisition id of the bourgeoisie finally overcome their superegoistical fear of unemployment and capricious interest rates? Or will they once again retreat after half a dozen nuisance 'viewings'?

It is not only the estate agents who are holding their breath. Beyond them lies the whole diaspora of the property-owning democracy business - lawyers, builders, building materials, DIY, furniture, paint, soft furnishings and Norman Lamont. If, this time, a decent percentage of those viewers actually commit themselves, then, the thinking goes, we're off. The moribund economy will be booted back into life. In a curious reversal of cultural status, the estate agents are no longer scum-of-the-earth, mobile-phoned parasites, they have become the heroic shock troops of the coming Lamont boom.

And surely, the agents and the building societies reason, this time it will happen. For three years house prices have been falling. The price of flats in London's Docklands has halved; one-third has dropped from prices across the South-east. Repossessions at bargain prices overhang the market like cautionary vultures. People have stopped moving - transactions last year were fewer than half the 2.2 million of 1988. Now, now, they scream, must be the time to buy, even if it is a terrible time to sell.

Only the British could have constructed such a bizarre counter-recessionary strategy. Our faith in the virtues and benefits of property ownership and all that it entails is unique in the world. At some point between 1919, when almost all new property development was for private rental, and the mid- Thirties, when the Metroland estates spread outward from the cities, the belief that renting was bad and buying good entered the British imagination. It was a belief later reinforced by the dismal quality of some post- war public housing.

All sorts of cultural and economic forces can be evoked to explain this switch to property ownership. But the effect was clear. It placed the privately owned home at the centre of respectability, stability and status. The owner was independent, a yeoman rather than a peasant, and the stylistic cues of the first big private estates in the Thirties - Tudor whimsy or late Edwardian sturdiness - advertised the solid virtues of freehold ownership. Combined with some paper-thin developers' ideas of neo-classicism, they still do in the private estates of today.

There is something defensive about this - defensive not only against the world, but also against the age. Although the new bourgeois is a beneficiary of a modern dissemination of wealth, he wishes to claim some of the status of old money.

Like their parents, people today still overwhelmingly favour antique styling and vaguely old-fashioned decor over the distinctively modern. DIY centres sell Victorian mouldings, Georgian doors and baroque surrounds for light switches, all the paraphernalia blandly captured by the estate agents' perversely adjectival use of the word 'period'.

The styles say that home ownership, to the British, means rootedness and a very literal connection with the past. By itself such a conviction may be beneficial. Freehold homes are generally better maintained than rented.

Property ownership may tend to freeze the economy by making people less willing to move; on the other hand, it offers a higher degree of freedom and, all things being equal, security. On the whole there is little to complain about in a freeholding yeomanry. It is not as intrinsically virtuous as some like to claim, but it is harmless.

It all went wrong, however, when inflation intervened. The big property price rises of the 30 years from 1960 added a new desperation to the business. You had to buy in order to gain the equity to trade up. Even Margaret Thatcher spoke of getting her children on the 'housing ladder'. You borrowed as much as you could in the sure and certain hope that inflation would soon dwarf any mortgage.

The property-owning British found themselves sitting on assets of dizzying value. They were corrupted and blinded to the unreality of it all. They saw the tens of thousands as real and, at the backs of the minds of the post-Woodstock generation, was the thought that, when drop-out time came, they could cash in and live in hippie peace in Goa. It was as if playing the house market offered an entire generation the option of a spectacularly early retirement.

The simple virtue of home ownership became entangled with the more complex demands of investment. Where you lived became not only your cultural but also your economic identity. The Thatcher government exploited this to sell off council houses, and thus provided the final acceleration of the post-war home-ownership drive. In 1945 30 per cent of households owned their homes; by 1990 the figure was 70 per cent.

But all this was predicated on the idea that a rising property market was a law of nature. And this conviction arose because of a massive one-off transfer from rental to ownership, encouraged by tax incentives and an excess of funds available for home loans. It was, in short, not a solid marketplace of bricks and mortar, but a temporary fantasy built on groundless notional values.

The property collapse that followed the last boom in 1988 has, as a result, been an appalling trauma for the British. Fingers have been burnt at every level. The working class council house buyers have been crippled by interest rates and/or unemployment and repossession; the middle classes overmortgaged themselves and now find themselves deep in 'negative equity'; and, at the very top of the market, disasters such as the Lloyd's scandals have produced a steady flow of distress sales and even moonlight flits. None of this may have happened to you, but it has certainly happened to your acquaintances and your confidence will have been knocked as surely as theirs.

Before Black Wednesday the prudence and wisdom inspired in you by these spectacles would have been in line with government policy. Inside the ERM there was to be sensible financial rigour and certainly no more of that Lawson boom stuff with silly house price rises. Oh no. But then suddenly, after Black Wednesday, a house price boom was exactly what we wanted. It is called 'Going for Growth'. Gazumping? Contract races? Yes, please.

Official wisdom now is, in effect, that only a revival of the housing market can lead a recovery. The only way to get us going, to start us flashing the plastic again, is to fool us into thinking we are rich by ascribing fantasy values to our primary assets. This amounts to an admission that the British are too economically depraved to be tempted into the pursuit of real money. Funny money made us great, funny money will make us great again.

Perhaps it is true that some brief boom can be engineered by the lenders, the agents and the desperate government and, perhaps, if you are trading up, now really is the time to buy. But do not expect to get rich. For the good news is that the housing market will never be the same again.

Many of the working class buyers who came in during the Eighties will have been shocked out of property ownership for ever. Demographic changes mean that the numbers in the first-time-buyer age group will halve during the next decade. The basic pressure from below will have gone and that will feed right through the system from Walthamstow to Hampstead - no homeowner is an island. Finally the building societies and even the Mr Magoos who masquerade as bankers in Britain should prove much more cautious lenders.

This points to a stabilisation of the property market. Prices may do no more than track general inflation. Housebuilders and developers will have to compete in a more perfect market. This will oblige them to offer quality and more distinctive design. One dreadful product of the undiscriminating British enthusiasm for property has been the appalling tat with which Messrs Barrett, Wimpey and their colleagues have filled the landscape, thinking that it was what the people wanted when, in reality, it was only what the poor junkies needed.

Best of all, the whole property fantasy will collapse. Gradually the British will lose their lingering, immoral suspicion that buying houses is a more certain and effective way of making money than working. Slowly the middle classes will lose their superstitions about home ownership. Renting will become more common. Surpluses may be saved or even productively invested.

For the moment, prevailing economic wisdom says we must take another shot of the drug. It will be bad for us, but nice Mr Major has his job to think about, and trying to be good Germans did not work. The best hope is that the dose fails, that house prices do no more than stabilise, and that the daffodils of another 'buying season' wilt while the British stay stubbornly at home digging the same old gardens.