George Osborne: housing shortage will last for ten years

CHANCELLOR George Osborne has warned that demand for housing in Britain is likely to outstrip supply for at least the next decade.

More needs to be done to address the "historic" imbalance, he said. However, he insisted that the Coalition's planning reforms were having a positive effect, with an increase in planning applications and approvals.

"We are pulling a lot of levers," he said. "But this is a historic problem... I don't pretend this problem is going to be solved in a few months or a couple of years. This is a big challenge for our country. We have got to build more homes."

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He added: "I imagine if we were to assemble again in 10 years' time we would still be talking about the challenge of making sure our housing supply keeps up with demand."

Osborne's comments came as he gave evidence to the Lords economic affairs committee yesterday, reports The Guardian.

He defended the Government's Help to Buy scheme, which has faced criticism from figures including Liberal Democrat Business Secretary Vince Cable, who believe it is stoking a housing boom in London and the South East.

Nevertheless, Osborne added: "We are recovering from a property crash. Am I someone who says we should be vigilant about this? Absolutely we should be vigilant."

He explained that the Bank of England did not believe there was a "housing bubble", but added that they too remained "vigilant".

Osborne also rejected calls to lower the Help to Buy purchase price cap from its current level of £600,000, saying this would do more harm than good.

"The pre-cursors of Help to Buy - FirstBuy and HomeBuy - all had quite a lot of restrictions placed around them, and were not as effective as Help to Buy has been in a very short space of time," he said. "So when we were designing Help to Buy we wanted to make it a simple, easy-to-access scheme."