HBOS’s decision to shut a quarter of its estate agency branches speaks volumes about the housing market. Transactions are rare, lenders are cautious, prices are falling and there’s no sign of respite any time soon. Gordon Brown faces pressure from some quarters to do something about it and his advisers have hinted at a package of measures once he gets back from Beijing.

Whether he should intervene in the housing market, however, is a moot point. There is a strong case for letting market forces do their damnedest. At some stage, prices will fall far enough to flush out buyers and financiers and create a new equilibrium. The Government’s supposed goal of affordable housing is getting closer with every passing month. With food and heating costs soaring, there is surely some political capital to be gleaned from encouraging the cost of shelter to come down.

There is a problem, however. Falling house prices are souring consumer confidence. About £400 billion has already been wiped from residential property values in the past year, according to PricewaterhouseCoopers. Homeowners are feeling poorer.

With GDP growth revised downward to zero yesterday, Britain has come to an official economic standstill. Further falls in house prices could easily trigger a spending freeze, seriously exacerbating what is already going to be a painful slowdown.

There is one measure the Government could easily adopt that would put an immediate prop under the market. It requires legislation, but the legislation has already been drafted because Mr Brown came within a whisker of enacting it three years ago. Gathering dust, it could be resurrected within weeks.

It would be far more effective than the idea to temporarily scrap stamp duty and would help to win back the middle classes, the constituency whose support Mr Brown has so emphatically lost.

It is to allow residential property to be put in individual pension funds known as Sipps [self-invested personal pensions]. This was the policy Labour was keen to introduce as part of its laudable plan to boost pension saving. Then came the explosive and unconscionably late U-turn in December 2005.

No minister ever explained the change of heart. One theory was that the Government wobbled over the potential lost tax revenues – perhaps £4 billion a year. The more likely explanation was that ministers were worried they would be seen as putting property even further out of reach for first-time buyers.

If Mr Brown does want to see life return to the housing market, he should dust off that shelved plan. The economics of buy-to-let property owning would improve at a stroke, with property in Sipps free from income tax and capital gains tax. A change in the rules would help to unleash a rush of buyers and would also help to deter the thousands of existing buy-to-letters now considering selling.

The ban on Sipps investing in property is illiberal and irrational. Ministers and civil servants, insulated from the harsh workings of financial markets and inflation by their final salary pension schemes, do not have to worry. The vast majority of the working population - now paying into defined contribution schemes including Sipps - are entirely at the mercy of markets.

It cannot be right that they are excluded from a core asset class such as property, particularly since it is an asset class they (a) understand and (b) can manage themselves, saving themselves from the high fees of the fund management industry.

If Mr Brown wants to shore up the housing market, he could do a lot worse than execute a U-turn on his original U-turn. Before then, however, he has to grapple with a much harder dilemma, one that mainstream politicians have been ducking for decades: does he want high house prices or low ones?

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