'We will not allow a house price boom': Minister insists young buyers must get a chance

Published 12th Oct 2010

Britain cannot afford another boom in house prices – and the Coalition will act to prevent one, the housing minister declared last night.

There has been a flurry of warnings about the market, which the International Monetary Fund last week insisted remained ‘over-valued’.

And today, research reveals that the mortgage drought is leading to ‘a lost generation of homebuyers’ who may never own property.

Yesterday, Grant Shapps said it was vital to ensure future generations can step on to the housing ladder. ‘I really think the big question is if you allow a housing boom as they [Labour] did between 1997 and 2007 to get out of control, this is the kind of mess you end up in.

‘What is required is long-term stability in house prices. We can’t afford to have another boom which will lock another generation out of the housing market,’ he told Channel 4 news.

‘It is in everyone’s interest to have stable house prices for a long time, because the only way we can make sure housing is more affordable for future generations is not to have these crazy housing booms.’

Mr Shapps, who is due to make a speech on house prices today, insisted buy-to-let purchases, which have been blamed for crowding out first-time buyers, did have a role to play.

‘It provides flexibility. There are people who want to buy into properties, but I also recognise that there are people whose aspiration is to own homes.

‘It’s not for ministers to give housing investment advice, but I’m not sure people are right that this is a forever upward market.’

Meanwhile, today’s research by Professor Steve Wilcox, from the University of York, warns that about 100,000 young people a year try, but fail to buy their own home. Only ‘a privileged few’ can afford to buy, as they cannot meet banks’ demands for a deposit of at least 10 per cent.

Often it is only those who can draw on the ‘bank of mum and dad’, who can buy. Professor Wilcox’s research shows how many are forced to wait until their late 30s to buy.

The average age of an ‘unassisted' buyer, who has no help from parents, has risen to 36 today, from 33 three years ago.The average age of an ‘assisted’ buyer, with parental help, is 30.

The report blames the demands made by banks before they will hand out a loan.

Over the last three years, the number of ‘assisted’ buyers under 30 has remained unchanged at around 80,000 a year. But the number of ‘unassisted’ buyers of this age has dropped from 120,900 in 2006 to 20,200 last year.

Angel Mas, of Genworth Financial, which commissioned the research, warned of a ‘deposit barrier’ in Britain.

Mr Mas said the situation is ‘extremely unfair on those who cannot rely on parental support for a deposit’.

In the past, buying property has been ‘their best chance of wealth creation and saving for the future.’

A British academic yesterday won the Nobel prize for economics – and immediately criticised the Coalition’s planned spending cuts.

Professor Christopher Pissarides said that austerity measures proposed by George Osborne risked an unemployment crisis.

The economist, 62, of the London School of Economics, received his award for his work analysing the jobs market.

He said: ‘It is not clear yet that the Government has a good, consistent policy with the incentives they are giving to get people back to work. They are probably cutting the budget a little too fast.’

Source: ' ThisIsMoney '

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