TUC: Gov fails to understand housing crisis
O’Grady warned that while house prices are going up four times faster than people’s wages the risk of another housing bubble threatens “economic chaos”.
He said: “No wonder mortgage approvals are falling and first-time buyers are struggling to save a large enough deposit. We all know that housing bubbles burst and cause economic chaos.
“There is no sign the government yet understands the challenge of ending the housing crisis. Their headline policy is an incredibly unpopular plan to sell off social housing to the private market. This would reduce the supply of affordable homes when we should be adding to them as quickly as possible.”
His comments followed house price data from the Office for National Statistics which showed an annual increase of 9.6% in March compared to just 2.2% for wages.
House price annual inflation was 9.4% in England, 5.7% in Wales, 14.6% in Scotland and 7.5% in Northern Ireland. This is the highest annual increase in Scotland since July 2007.
Even excluding London and the South East, UK house prices increased by 8.1% in the 12 months to March 2015.
Prices paid by first-time buyers were 7.8% higher on average than in March 2014 while owner-occupiers saw prices rise 10.3% for the same period.
Alex Gosling, chief executive of estate agents HouseSimple.com, said: “The issue over the past few months has never really been about demand because the buyers have always been there.
“It’s supply that is holding the market back, and more activity won’t lead to sales unless the stock shortage is addressed.”