Two of the government's key housing policies will fail to solve the housing crisis in the South-east, a leading property economist has warned.
The four housing growth areas proposed in the Communities Plan will not lower demand for housing in expensive parts of the South, according to professor Michael Ball of Reading University.

Speaking at the Royal Institution of Chartered Surveyors last Wednesday, he added that moves to boost the take-up of long-term fixed interest rate mortgages would not stabilise the housing market.

Ball said: "The new housing is to be concentrated in a limited number of locations which would imply extremely long journeys to work or movement of employment, which won't happen. You would need very high-speed transportation links but they are very expensive."

He added: "If they did get people to work in these places, then they would be very large new towns."

He gave as an example new towns outside Paris, which had failed to reduce demand for homes in the city.

Treasury plans to promote fixed-rate mortgages would not help the market, he said. "There isn't any evidence that countries with fixed rates have more stable housing markets. Variable rates are popular in Finland and fixed rates are popular in Sweden and Denmark but all have had massive housing price booms."

Peter Williams, deputy director-general of the Council of Mortgage Lenders, agreed that fixed-rate mortgages would not stabilise the market but said they could give borrowers certainty over how much they had to repay.

Source

Housing Today