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Brown commits extra £1.4bn to housing

The Government has pledged to increase spending on housing by £1.4bn to £4.7bn in 2005 to tackle problems over supply and affordability although advisers say it may not have much impact on the overall market.

It says much of the increase is to deal with the severe difficulties in London and the South-east. This area will get additional investment in affordable housing for rent.

In this week&#39s spending review, Chancellor Gordon Brown also said there will be reforms intended to help key workers, such as teachers, find affordable housing through employer involvement and funding.

Halifax research shows that the average house price in Greater London is £195,391 while the average teacher&#39s salary is £29,020.

Independent mortgage consultant Mark Chilton says: “Funding for more accommodation for essential workers is unlikely to have a material impact on the property market itself in the South-east as it is dealing with a very specific segment of the population. If the Government wants to retain the housing stock for essential workers, the most sustainable way is building council houses but politically this will not happen. Instead, there will be increased subsidies to housing associations.”

Halifax group economist Martin Ellis says: “Hopefully, along with measures that the Government has already in place, a series of policy initiatives in the comprehensive spending review will go some way towards solving the problem.”

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