Kate Hughes: Housing market needs more than cheaper extensions

I'm sure you'll be completely fascinated to hear that I'm weighing up the possibility of a kitchen extension. I figure cooking in a space that both my fiancé and I can occupy simultaneously without asphyxiating ourselves has to be the height of luxury living. And after last night's Bolognese-sauce-meets-ceiling debacle, I'm already living in a B&Q catalogue in my head.

So you can imagine my feelings upon learning that ministers are dabbling with the idea of allowing homeowners to increase the maximum size of an extension or loft conversion they can currently secure without planning permission. In fact, on a detached property this limit could go up to 8m in length (6m for terraces) as long as it doesn't eat up more than half the garden.

It's all part of a larger package of measures, proposed as part of the Montague Review, designed to boost the economy via the construction and related industries, while tackling the housing crisis, by way of a cold hard injection of cash. Its proposals include promoting the conversion of offices to residential properties.

That's potentially a decent shot in the arm for housebuilding for sure, and as Liz Peace, the chief executive of the British Property Federation said: "We are pleased to see support to access home ownership and measures to encourage renting are also seen as important parts of this package. But this will only be a success if local authorities get behind it."

But from homeowners' point of view it seems a huge proportion (80 per cent is the figure anecdotally bounced my way) would not need to gain planning permission for their proposed extensions under the existing rules anyway, so the £1,000 or so saved on fees is fairly academic.

Plus, let's not forget there's no accounting for taste. Be honest, how many times have you been round to a neighbours or viewed property and instantly thought "I really wouldn't have done that", swiftly followed by "I wonder how much it would cost to put right."

Inevitably, mortgage lenders have been quick to throw their thoughts into the ring.

Nationwide has released research findings to coincide with the news that seems to reinforce the old chestnut that an extension will boost the value of your home hugely – music to the ears of desperate second steppers and the like, I've no doubt.

Its House Price Index Special Report calculated that creating an extra bathroom on a three-bedroom home could add 6 per cent to its value, another double bedroom could offer 12 per cent and building an extension or loft-conversion to create a double bedroom and en-suite bathroom could add 23 per cent to the value.

But the average price of this kind of property is only £160,000 according to Nationwide's figures, and only £157,383 in June 2012 if you refer to the latest figures from Halifax.

With the average cost of an extension coming in at around £1,000 per sqm, that's £23,000 for an average single storey extension and £76,000 for a double storey, Nationwide suggests, the costs seem to quickly outweigh the valuation gains.

This idea that throwing money at a falling market will solve our property price problems worries me greatly. The reality is that house prices are, overall, continuing to fall while the cost of building works and materials are not. If you've got the cash, that's great. And if you need the space for the long-term, fine, but if you thought a lean-to against the back wall would be the answer to your devaluation prayers, you might want to think again.

Surely that's not actually a surprise though. If we're treating property as an investment rather than a place to lay our heads then let's really do that. All assets are subject to market fluctuations and the most reliable way to secure decent returns is to simply sit it out long term. Nor, while we're on the subject, is failing to diversify a great idea, particularly in as volatile and unprecedented an economic climate as this.

So before we all go trundling down to the local planning office, is it worth hanging fire? Just for a minute?