Increasing the supply of homes rather than just restricting mortgage lending is the key to solving runaway house price inflation, David Brown has said.
The commercial director of LSL Property Services spoke out following the publication of the Office for National Statistics’s monthly House Price Index, which showed a rise in prices yet again in May.
According to the ONS, UK house prices rose 10.5 per cent in the year ending May 2014, with London seeing the largest annual increase of 20.1 per cent.
Excluding London and the South East, UK house prices increased by 6.4 per cent in the 12 months to May 2014.
Annual house price inflation was 11 per cent in England, 6.5 per cent in Wales, 3.6 per cent in Scotland and fell by 0.7 per cent in Northern Ireland.
On a seasonally adjusted basis, average house prices increased by 0.8 per cent between April and May 2014.
In May 2014, prices paid by first-time buyers were 11.3 per cent higher on average than in May 2013 and for existing owners prices increased by 10.1 per cent for the same period.
Mr Brown said: “The MMR has already had a cooling and stabilising effect on lending practices, with borrowers less able to overstretch themselves. And this only highlights a more fundamental problem.
“We are all facing a simple problem – there are just not enough places to live to go around. In the rental market, things are starting to improve, with average rents up by less than inflation for every month in the last year.”
Earlier this month, Paul Smee, director general of the Council of Mortgage Lenders, stated that unless policy makers got themselves “up a ladder” with a trowel and some cement and started to build the houses themselves, then all their policy measures would not have any effect.
