MortgagesNov 3 2015

EAC launches enquiry into UK housing market economics

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EAC launches enquiry into UK housing market economics

The Economic Affairs Committee in the House of Lords has launched an inquiry into the UK housing market.

Among the issues the committee will be looking at is whether the supply of reasonably priced private housing can be increased, and whether the current trend away from home-ownership is desireable.

It will also look at whether the government schemes such as Help to Buy have been effective at improving the affordability of housing, and whether there are tax measures that can improve housing supply.

Lord Hollick, chairman of the committee, said: “There are clearly serious issues with the UK housing market. Across the country, young people in particular are struggling with the cost of housing, whether they are looking to buy or rent. There is an affordability crisis in housing.

“We feel the time is now right for a thorough evidence-based assessment of the economics of the housing market.”

Data published by the Land Registry late last month showed that house prices in England and Wales have grown by more than 5 per cent from 2014 to an average of £186,553, although in London the average home now costs nearly £500,000.

Bernard Clarke, a spokesman for the Council of Mortgage Lenders, said: “The key issue is the shortage of supply and that’s where we need to see an improvement.

“The balance of tenures needs to be right to meet people’s needs. There is a high proportion of people who aspire to homeownership, but it has to be sustainable for people to take on.

“Increasing supply will help address affordability issues, but it is all about providing homes in the tenures people want.”

According to a study by the Town and Country Planning Association, England would have to build more than 220,000 additional homes each year until 2031, but only 54 per cent of this are being built.

Kate Henderson, chief executive of the Town and Country Planning Association, said: “The government has already fallen behind on their targets for house building, and this is now having a devastating effect on young people.

“More needs to be done to build the necessary number of high-quality, affordable homes for people who need them.”

The committee has asked for evidence to be submitted by 17 December.

Adviser view

Kevin Hever, financial adviser with Wolverhampton-based Cornerstone Financial, said: “I have not used Help to Buy a lot myself, but you do see a lot more houses being built at the moment, so it seems to have worked reasonably well.

“Interest rates are low and the requirement for the deposit is reduced it has stimulated demand.”