House prices soaring at 10 per cent a month in London are “dangerous and unsustainable”, Business Secretary Vince Cable warned today.
He said the capital was in the grip of an “extreme problem” of affordability, with both property values and rents spiralling out of the reach of many families. “What is happening is not just that house prices are rising, they are accelerating and that clearly is dangerous and unsustainable,” Mr Cable told The Standard.
“There is an extreme problem of affordability, particularly but not only in London. Families on middle and low incomes can’t get anywhere near an average property in London. This is a very worrying trend.”
The average asking price in the capital rose by £50,484 to a record £544,232 between September 8 and October 12, or 10.2 per cent, according to property website Rightmove. “In some parts of London it’s more than that, and rents — which are also a key indicator and of course affect the Government Bill for housing benefit — are increasing significantly faster,” added Mr Cable, who is MP for Twickenham.
The 10 per cent price rise was fuelled by even bigger increases of nearly 12 per cent in affluent boroughs including Kensington and Chelsea, Westminster, and Hammersmith and Fulham.
Just days ago, Mr Cable launched a report by London Liberal Democrats setting out plans for 270,000 additional affordable homes to be built in the capital over the next five years, suggesting more borrowing by the Mayor and town halls.
The Construction Products Association today increased its prediction for growth to 19 per cent for the £111 billion construction industry by 2017. CPA economics director Noble Francis said: “This is mainly due to private housing, which is experiencing a rapid rise, and infrastructure, which is seeing a more gradual return to positive territory.”
The Goverment’s Help to Buy scheme is expected to lead to private house starts increasing 19 per cent this year and 15 per cent nexty year, he added.
Meanwhile Boris Johnson insisted today that “Johnny Foreigner” was not to blame for London’s housing crisis.
The Mayor argued rich investors and migrant workers from EU countries such as Poland both helped the housing market. He compared foreign investors with Londoners who have second homes in the countryside, saying their “cash brings jobs, as well as homes”.
Writing in the Daily Telegraph, he said it was wrong to “persecute rich foreign investors with new mansion taxes”.
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He added: “We need to help young people — not beat up on Johnny Foreigner.” He said Britons were “the biggest load of bloody foreigners on earth”, and had pushed up property prices in countries such as France.
