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House builders call for stability after Carney warns on housing market

19/05/2014
House builders call for stability after Carney warns on housing market
Housebuilders have warned the Help to Buy scheme remains critical to boosting housing supply, after the governor of the Bank of England said an overheating market was the biggest risk to recovery.

The house building industry said that it needs stability to deal with the housing shortage, not further tinkering with finance and support for buyers.

At the weekend, Bank of England governor Mark Carney gave his starkest warning yet that he is looking at measures to head off a property price bubble.

Carney said the housing market now posed the biggest single risk to Britain’s economic recovery as a shortage of new homes drives up prices.

He said that the Bank had no solution for building levels, but could act to dampen demand with a series of fresh measures.In a television interview, he said: “We could limit amounts of certain types of mortgages that banks could undertake, we could provide advice – the Chancellor has asked us if we would provide advice on changing the terms of Help to Buy.

All those things are possibilities and we will consider them all.”But the industry has hit back warning that Help to Buy is an essential part of the ongoing housing-led recovery and must not be tinkered with.

Mike Leonard, director of the Modern Masonry Alliance, said: “What we need is a 30-year housing and infrastructure outlook to provide the confidence and consistency needed by both the supply chain and housing delivery industry.

“Operating a kneejerk on/off switch is exactly the opposite of what the industry needs for long term stability.”

Home Builders Federation Executive Chairman Stewart Baseley said: “We have an acute shortage of housing that has developed over decades and is going to take time to address.

“After years of the lowest rate on record, house building is now increasing very rapidly.”

He said that the housing industry was starting to motor with private starts up a 44% year on year in the first quarter of 2014.

“To maintain and sustain these increases house builders need stability,” said Baseley.

“The Help to Buy Equity Loan scheme has supported demand for new build homes and its extension provides certainty about longer-term demand.

“This is allowing the industry to plan ahead, rebuild capacity lost in the downturn and deliver. This is providing desperately needed homes and also creating jobs on sites across the country and in the supply chain.

“While the number of Equity Loan scheme sales is very small in terms of the overall housing market, it is driving up new housing supply.”