Minister: I’ll stop housing boom for good

By JASON GROVES FOR THE DAILY MAIL
Updated: 06:40 EST, 5 January 2011

Britains's property boom could be over for good, the housing minister said last night – as experts warned prices could fall by 6% this year.

Experts warning: Prices are predicted to drop 6% this year

Grant Shapps said homeowners should no longer rely on their houses to fund their retirement.

He said ministers were hoping to engineer an era of 'house price stability' in which property values would gradually be eroded by rising earnings.

He suggested that in a 'rational' market, house prices might rise by 2% while earnings rose by 4%, making property more affordable over time.

The Government is trying to encourage councils and developers to build more homes to suppress the market and make it easier for first-time buyers to get on to the housing ladder.

Mr Shapps, a Conservative, said a fall in the real value of houses would ease the 'horrendous' situation faced by millions of young people.

He said property should 'primarily be thought of as a place to be your home' rather than as an investment. 'I think it is horrendous that a first-time buyer would need to be 36 on average if they do not have the support of Mum and Dad,' he said.

'The main thing everyone requires for their subsistence is a roof over their head and when that basic human need becomes too expensive for average citizens to afford, something is out of kilter.

'I think the answer is house-price stability. We had this crazy period from 1997 to 2007 when house prices almost tripled, which is fine if you had a house.'

His stark message is likely to frustrate many middle-class families who have increasingly relied on property following the failure of other pension investments.

It also risks leaving him open to charges of hypocrisy as he has previously proved an astute operator in the housing market.

He pocketed an estimated £250,000 from one house sale and could make a similar amount if he sold his five-bedroom detached house in Hertfordshire, which is worth more than £1m.

Economist Howard Archer said house prices could fall by as much as 6% in 2011 as rising unemployment and the continuing mortgage drought take their toll.

But he said the British obsession with housing was unlikely to change unless ministers took dramatic action.

He said the continuing shortage of property was likely to see prices rise in the long term.

Mr Archer, of the forecasting firm Global Insight, said: I really cannot see the situation changing significantly in the UK – there is very much a home-owning psychology in the UK. And over an extended period of time, house prices do tend to rise so it has long been perceived better to buy than to rent if you can.

'I just cannot see that view changing unless house prices stay flat or even fall for an extended period.'

But Britain does boast 200 millionaires' rows

There are more than 200 streets in England and Wales where the average home costs more than £1m, research showed yesterday.

Parkside in Wimbledon, South West London, has been unveiled as the country's most exclusive millionaires' row, with prices averaging £5.05m.

It is set between the All England Lawn Tennis Club, a picturesque common and a large park.

Woodlands Road West in Virginia Water, Surrey, is the most expensive street outside London, with average prices of £2.77m.

Outside the South East, the most exclusive street is Brudenell Avenue in Sandbanks, Dorset, where buyers would have to find £2m to move in.

The most expensive street in the North West is Withinlee Road in Macclesfield, where prices average £1.62m, and in the North East it is Graham Park Road in Newcastle, at £1.22m.

Sedley Taylor Road in Cambridge is the priciest street in East Anglia at £1.11m but there are no roads in the East Midlands, West Midlands, Yorkshire and the Humber or Wales where houses sell for more than £1m on average.

The most expensive street in Yorkshire and the Humber is Bracken Park, Scarcroft, Leeds (£871,000); in the East Midlands it is Sandy Lane, Northampton (£865,000); in the West Midlands it is Alderbrook Road, Solihull (£850,000); and in Wales it is Llantrithyd Road, Glamorgan Vale (£789,000).

The research into Britain's 228 millionaires' rows was carried out by Lloyds TSB.