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&#39Little impact&#39 from housing boost

Deputy Prime Minister John Prescott&#39s plans to spend £1.1bn on new housing in the South-east to reduce shortages and ease affordability for key workers will have a minimal impact on house prices in the short term, according to IFAs.

Up to 200,000 new homes will be built in the South-east using some of the £4.7bn earmarked for key workers&#39 housing under Chancellor Gordon Brown&#39s spending review.

But mortgage experts say the initiative could be too little to late to curb spiralling house prices and shortages.

The majority of the subsidised housing would be set aside for teachers, nurses, police officers and firefighters and concentrated around Thames Gateway, Milton Keynes and between Stansted and Cambridge. Research by Halifax shows that key workers are being priced out of the housing market in the South compared with 10 years ago.

In London, the average price of a property is £195,391, which is 8.6 times more than a nurse&#39s average annual pay of £22,719 compared with 5.25 times annual earnings in 1992.

Housing minister Lord Rooker is also looking at reforming the national right-to-buy programme for council tenants and replacing it with local schemes allowing tenants to take stakes in their housing.

Savills associate director Simon Jones says: “I think most people agree that the plans will have minimum impact. There is no way that 200,000 new homes can be built quickly but as part of a long-term plan it is a great idea to build affordable homes for key workers.”

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