The UK is facing a house building crisis, with house prices continuing to soar while earnings growth is stagnant by historical levels. Average house prices have crossed half a million pounds in London for the first time.
Apologies. UK house prices vs Earnings using good British data instead of Eurostat propaganda.twitpic.com/crwc7w— Paweł Morski (@Pawelmorski) May 20, 2013
City A.M.'s editor Allister Heath argues that a housebuilding revolution is necessary to tackle the growing bubble:
After a long period during which UK house prices fell in nominal and especially in real terms, the market has bounced back, buoyed by the government’s desperate attempt to reflate the market, including through help to buy, a reckless scheme that Sir Mervyn King rightly warned against making permanent at the weekend.
Rightmove’s latest survey suggests that the national average asking price has hit a nominal record of £249,841 in May, with five consecutive monthly rises pushing up prices by 9.1 per cent year-to-date, the strongest start to a year since 2004. The South East and East Anglia have hit all-time nominal highs, while prices in London have smashed through the £500,000 barrier, hitting a record £509,870. These are crazy bubble-like prices, and reflect a lack of supply in the market.
We are not building enough. Annual housing starts in England were a shockingly low 101,920 in the 12 months to March, down 3 per cent compared with the year before; completions totalled 108,190, down 8 per cent. This is an absolute scandal.