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Housing: Prices

House of Lords written question – answered on 7th November 2013.

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Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Liberal Democrat

To ask Her Majesty’s Government, further to the comments by the then Minister of State for Housing and Local Government, Grant Shapps, on 12 October 2010 published on the Department for Communities and Local Government website, whether house price stability remains Government policy.

Photo of Baroness Stowell of Beeston Baroness Stowell of Beeston The Parliamentary Under-Secretary of State for Communities and Local Government

This Government is committed to delivering long-term economic stability and economic growth. The last Administration oversaw a housing boom and bust, and this Government has been picking up the pieces. We have a series of initiatives to boost housing supply, increase the provision of affordable housing and support a healthy private rented sector. By tackling the deficit left by the last Administration, we are helping keep down both interest rates and the number of repossessions.

The housing market has turned the corner, but mortgage lending activity in the housing market and loan-to-value ratios on new mortgage lending remain below their historic averages. Relative to earnings, median house prices across England are around the same level they were in 2005.

I would also note that ensuring financial stability is the primary goal of the Bank of England's new Financial Policy Committee. They have analysed the housing market and the Financial Policy Committee statement from its policy meeting on 18 September 2013 stated:

“The recovery in the housing market appeared to have gained momentum and to be broadening. Mortgage approvals in July were 30% higher than a year earlier and average house prices in August were 5% higher than a year earlier and have risen more in some parts of the country, particularly London. Nevertheless, activity in the housing market and loan-to-value ratios on new mortgage lending remained below their historic averages. Housesholds’ debt servicing costs were low and the ratio of house prices to earnings was at its level of a decade ago”.

In view of that, the Committee judged that it should closely monitor developments in the housing market and banks’ underwriting standards. The Committee would be vigilant to potential emerging vulnerabilities'

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