The prospect of a housing bubble loomed high on the agenda of the IoD’s London conference today as escalating prices sparked fear of another correction.
London Mayor Boris Johnson and chancellor George Osborne faced the brunt of the questions about controlling the outbreak of unsustainable price inflation, although both stayed adamant that they would keep the course.
Osborne praised government moves to ease up planning regulation, linking this to the recent upswing in construction. He also took the opportunity to call for even more construction to fill people’s “legitimate” desire to own a home.
Osborne insists that despite London property prices rising 10% in the last 12 months, the overall housing market is nowhere near bubble territory. The number of mortgages is still half of what it was in the pre-recession boom years that pre-dated the last housing crisis, while the number of transactions is also nowhere close to 2006 levels.
Johnson was also quick to dispel criticism about Osborne’s Help to Buy scheme that many have linked to the recent rise in prices, construction levels and estate agent vacancies.
House price increases are a “fact of life” and a “reflection of London’s dynamism,” Johnson told media.
“I support it so far as (Help to buy) produces more homes,” Johnson said. “That is the name of the game. It actually leads to the building of more homes.”
“If you don’t encourage the market to grow then you will not build enough homes for anyone, let alone the people who desperately need it. That is the way forward,” he added.
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