|
|
SIGNIFICANT
reforms to the mortgage, planning and house-building systems
will be introduced within the next 12 months as essential
measures to prepare Britain for euro entry.
More
houses must be built and more borrowers must be persuaded to
take out long-term loans if the housing market is to escape from
its characteristic boom and bust cycles, the Chancellor said.
He
singled out the housing market as an important obstacle to euro
entry and a chief cause of Britain’s volatile economy in the
past. “Most stop-go problems that Britain has suffered in the
last 50 years have been led or influenced by the housing
market,” he said.
New
powers to allow regions to enforce high levels of house-building
are being considered in areas like southeast England, where
demand for property outstrips supply. Low levels of
house-building were cited by the Treasury in its review of the
five economic tests as a key factor in forcing up house prices.
Britain
tops the European house price inflation league, with prices
rising 25 per cent last year, compared with 17 per cent in the
second-highest performer, Spain.
At
the same time, Britain has one of the highest levels of mortgage
debt compared with income in the industrialised world. High
house prices, coupled with high levels of debt at variable
rates, made the housing market far more sensitive to interest
rate movements, the Chancellor said.
|
