The prospect of a housing bubble looms large over the UK’s economic recovery with decades of insufficient supply and a series of demand-side Government schemes raising concern among economists.
Yet on Monday the Prime Minister announced that the Shared Ownership initiative, which allows Housing Association tenants to buy a share of their home and pay rent on the rest, will be extended.
Speaking to PoliticsHome, Shadow Housing Minister John Healey warns that the inflationary pressure associated with this Government funded fuelling of the market is dealing with the problem “from the wrong end."
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He warns: “You put demand subsidies in place like this and you risk driving up demand, driving up prices and you risk the public funding people who could buy anyway. So, it’s very poor value for public money.”
The senior Labour figure suggests that even within the Government’s own ranks it is acknowledged that this approach is unsustainable.
“You talk to politicians, particularly Tory politicians; they think it may be stupid economics but it is clever politics.
“I think we will see that this becomes poor politics and poor economics over the next few years, because I think many people who have listened to the Conservatives about the extension of Right to Buy and Starter Homes and now Shared Ownership will find they are hugely let down.
“The promises… will not be met. For many people homeownership will still be well beyond their reach,” he says.
Uniting Labour
Despite the current fragmentation within the Labour Party, Mr Healey hopes that delivering a coherent message on housing can be something behind which the party can unite.
“I have said that to the PLP when I spoke to them about six weeks ago. It’s a brief in which we can demonstrate and have to demonstrate what we should be doing as the official opposition; firstly turning our fire on the Tories.
“Secondly, holding them to account for the track record that they now have over the last five years. And thirdly making big arguments about changes that are needed, alternatives that a change of Government could bring in the long-run,” he says.
Housing 'failure'
Turning his own fire on David Cameron, Mr Healey accuses the Prime Minister of presiding over “five years of failure on housing.”
In a damning analysis of the Conservatives’ record in Government, he concludes: “People have got to take a hard look at Cameron’s central claim. ‘We are a Government that delivers’ was at the heart of that speech – well, not on housing.
“On every front – homelessness is up, rents are soaring.... The number of genuinely affordable new homes being built is at the lowest for two decades.”
“Home ownership has gone down each and every year since 2010 and there are 200,000 fewer homeowners in this country than there were in 2010.
“Over the last five years – whilst Cameron has been Prime Minister this Government has built fewer new homes in this country than any Government since the 1920’s under Lloyd George.
"Homeownership is an aspiration that most people in the country have for some stage in their lives. The sentiment that Government can and should help is sound but they’ve failed to that in the last five years."