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Stephen Smith: Boost supply, not demand

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As the last weeks of the general election campaign grind on, at least we seem to have some emerging consensus about what needs to be done in the housing market (although little consensus about how). For the first time in many years housing features strongly in the manifestos of all parties and there is something of a bidding war for how many new properties each is promising to build. I will wait to see how many of these are delivered but even the largest promise (the Lib Dem’s 300,000 new homes per annum) may not meet the actual need for new household formation over the next Parliament.

The truth is we have been falling way behind our national building requirements for over a decade, since the Barker Report said we should be building 240,000 or so each year. In fact, we are probably over a million homes in deficit.

Given this chronic undersupply, you would hope the plans put forward would focus on these issues first. Get the new homes we need built and then look to stimulate interest in buying them. But economic sense seems to go out of the window when the pursuit of votes is the short-term aim. How else to explain the demand side stimulus of the Help to Buy Isa?

Perhaps, as Precise Mortgages suggested recently, housing is too important to be left to the politicians. It should be given to the Bank of England, charged with developing a long-term plan for this most fundamental of our national needs. I cannot quite see any politicians voting for that.

Stephen Smith is director of the Legal & General Mortgage Club 

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