Vince Cable attacks rising house prices

Galloping house prices are an “extremely bad thing” for families being priced out of the market, Vince Cable has said in an attack on the Conservatives.

The business secretary told the Financial Times he “did not agree” with Kris Hopkins’ remarks that rising house prices were “a good thing” as he voiced concerns that house price growth and wage growth were decoupling.

The communities’ minister’s remarks this week provoked outrage from housing charities, with Shelter pointing out that home ownership in England has fallen to its lowest level since 1987 as demand outstrips supply.

Mr Cable said the average house price is now about five and a half times the average income. House price inflation hit 9.5 per cent last month. In London, average weekly earnings rose 10.7 per cent between the fourth quarters of 2007 and 2013, while average prices increased by a quarter during the same period.

“It means that a family on average income is nowhere near able to afford a house at the average price. Property has become much more unaffordable for people on middle incomes,” said the business secretary.

Mr Cable has already criticised George Osborne’s Help To Buy scheme because it stokes demand in an already undersupplied market. But politically, rising house prices play well for the Tories who are targeting older, homeowning voters in the 2015 election.

“If you are an owner-occupier who has paid off your mortgage, it is an increase in your paper, or real, wealth. But if you are a young family trying to get on to the housing market and it is unaffordable, it is an extremely bad thing,” said Mr Cable. He also said the government needed to do more to encourage more housebuilding.

Tim Farron, president of the Liberal Democrats, said a recent Ipsos Mori poll showed the majority of people wanted house prices to stabilise or even fall slightly.

“If you are born after the 1970s, the chances are you will have little chance of buying your own home unless you come from a rich background. These people need someone to stand up for them.”

The Lib Dems will make housing a big feature of their election campaign next year and are thought to be considering whether to allow development on low-grade agricultural land in order to boost housebuilding, while also protecting the greenbelt.