Charlie Cadywould, a researcher at Demos, says Yes.
Since 2010, housing policy has largely focused on demand-side measures, designed to give particularly first-time buyers a leg-up on the housing market. In reality, these policies may have only served to push up prices further. It is only through increasing supply that the escalating housing crisis plaguing London and the South East will be addressed.
A “hot” market is good news for Britain’s millions of existing home owners. But we are facing an era where renters will eclipse owner-occupiers in many parts of the country, and the generational divide between housing’s haves and have-nots could further entrench economic inequality.
Across the political spectrum, we have seen a distinct unwillingness to tackle the need to build more homes on the scale we need to keep pace with demand. Planning reforms may help stimulate brownfield development, but more decisive action will be required to cool the market, and bring Britain closer to sustainable housing provision.
Martin Beck, senior economist at Oxford Economics, says No.
Although the BBA’s numbers suggest increasing signs of life in the housing market, this should be set against other, more subdued, indicators. In the first half of 2014 the three main house price measures – Nationwide, Halifax and ONS – were reporting price growth of around 3 per cent a quarter.
But the latest data show the Nationwide and ONS series running at a quarterly pace of less than 1 per cent and, while the Halifax series is higher, that seems to be largely a function of noise in the data. Granted, stronger household incomes and continued low interest rates should be supportive of activity and prices. But we think it unlikely that there will be a strong pickup in the market.
Affordability is stretched, excluding many potential buyers, while the Financial Policy Committee appears unlikely to accept any loosening in lending standards. As such, credit conditions are set to remain fairly tight, contributing to our expectation that price growth will continue to cool.