Property Market

Lee Scott Excerpts

Tuesday 25th January 2011 Westminster Hall

[Richard Harrington (Watford) (Con)]

I have an interest to declare, which is in my entry in the Register of Members’ Financial Interests, because I have for many years been a director of a company involved in, among other things, the development of housing, although I have no active involvement in the company. I thank Mr Speaker for selecting my debate; it is much appreciated.

Housing is on the mind of most Members of Parliament, as much of our correspondence relates to it. I am pleased to see the Minister for Housing and Local Government here; I am sure that he will, as a Watford grammar school boy and former Watford resident—he has gone on to greater things and places—find some of the points I shall make very relevant to that place.

Housing has the attention of the media, and a recent article in The Guardian, following an interview with the Minister, was headed “Minister pledges an end to the housing price rollercoaster”, which I was pleased to read. However, for people who are struggling to get on the first rung of the ladder, things have never been more difficult. In my constituency in 1996, the average price of a house was more than £73,000. By last year, notwithstanding some reductions in prices, it had reached £234,000. It is easy to see how difficult the situation is for first-time buyers whose average age, calculated locally, has risen to 37 years old. I was delighted that it was announced in the comprehensive spending review that the Government will increase housing supply

“by reforming the planning system so it is more efficient, effective and supportive of economic development.”

I am delighted that the Government have recognised the problem and are committed to tackling it.

It is fashionable to place the blame for the current situation on the recession and the banks, but I believe that for many years, from before the recession, there has been a consistent structural problem—a fundamental demand for housing which greatly outstrips the supply. Only an increase in supply will meet demand, tackle the problem effectively and create greater opportunities for first-time buyers.

[Mr Lee Scott (Ilford North) (Con)]

I congratulate my hon. Friend on obtaining the debate. Does he agree that while the blame does not rest totally with banks, they are making things increasingly difficult for first-time buyers and, indeed, for other people who want to move home?

[Richard Harrington]

That is correct, and a valid intervention, which I intend to discuss briefly.

The demand side of the equation is clear. Short-term economic factors may have reduced it, but the fundamentals are as bullish as ever. The south-east, according to all the research that I have seen, is expected to continue the population growth trend, and despite all the incentives that the Government may provide for a change in regional preferences I think that the trend is unstoppable. Without going into too much detail, the factors include migration, the social trend towards more households following divorces, the population getting older and the great predilection for living in small households. Above all, I do not think that anyone can say that the demand side will change much.

My hon. Friend the Member for Ilford North (Mr Scott) mentioned lending. At the moment, one of the biggest obstacles is the decline in lending. The figures show that the contraction in UK mortgage lending since 2007 has been the most severe on record. In 2008 and 2009, about 500,000 loans were granted for house purchase. That is a lower figure than for any year since 1974.