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The Treasury Speaks

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One of the key goals that this Government has set itself is to build on our record of economic stability, to greatly extend the opportunities available to people to meet their aspirations and access a decent home at a price they can afford.

However, the Government recognises the problems of housing affordability that sections of the population have experienced caused by the rises in house prices over the past few years. In 2002, for example, only 37% of new households could afford to buy a house, compared to 46% in the late 1980s.

A major cause of such affordability problems has been the persistent strong growth in real house prices over time, driven by the long-term failure of housing supply to respond to changes in the demand for housing. Over the last 30 years, UK house prices have risen by 2.4% a year in real terms - compared to the European average of 1.1%. Meanwhile, the current rate of house building is insufficient to replace the existing ageing housing stock, let alone accommodate the growth in households.

It was in response to these concerns that the Chancellor and the Deputy Prime Minister appointed Kate Barker, a member of the Bank of England's Monetary Policy Committee, to conduct an independent review of the issues affecting housing supply. Her report, published with the Budget in March 2004, set out clearly the very real costs of persistent under-supply to both individuals and the economy more generally. It identified growing problems of affordability for new households, wealth redistribution from those outside the housing market to those inside the market, and significant regional price differentials and expectations, reducing labour mobility and constraining productivity. It then set out a series of policy recommendations to address the long-term lack of supply and responsiveness of housing in the UK, including increasing social house building.

The Government has welcomed Kate Barker's report and accepted the need for reform. It agreed that delivering its commitment to stability and affordability would require a significant increase in housing development over time, and announced that it would be implementing a programme of change, as recommended by the Review, to the planning system and the delivery of housing.

This drive to increase housing supply has delivered an upward trend in new

house-building, with new housing completions in England reaching 160,000 in 2005 - the highest level since 1990. However, the Government is determined to see faster progress and will bring forward further measures to increase and speed the delivery of new, sustainable, and more affordable housing.

Other measures that the government is taking to boost home ownership include the establishment of a Shared Equity Taskforce. This will report later this year on the scope for shared-equity products to assist more households into homeownership through the HomeBuy scheme. The Government will be directly assisting over 100,000 households that otherwise could not afford a home of their own with subsidised shared equity products. To find out more about the HomeBuy scheme please contact the Housing Corporation (www.housingcorp.gov.uk).

I hope you will find this helpful Mr Pritchard.

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Her report, published with the Budget in
March 2004
, set out clearly the very real costs of persistent under-supply to both individuals and the economy more generally.

And Gordon has done what, exactly, in response to this very expensive, public funded report?

Football Association!

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How accurate are those percentages (% of households that can afford to buy) how current is the '37% of new households'?

By the way, a BoE official told me this PM that "Prices have probably risen faster than we would wish."

Edited by gruffydd

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The answer seems to be lets build lots of poor quality crap new build 1 and 2 bed flats in areas people don't want to live in!

My friend is renting in a new build complex in east London - they went without running water for three days last week because the water pump broke. Generously the developers offered to reimburse people for the bottled water they had to buy but only if people provided receipts - disgraceful given that most people paid £200k plus for the flats just 6 months ago!. No other compensation offered at all!

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  • 312 Brexit, House prices and Summer 2020

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      • down 5% +
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