House prices to soar to 13 times average wages by 2020 Labour warns, as Nationwide reports new record high
02-20-2015
- On current trends, London house prices on course to hit £832,240 by 2020
- Average deposit in the UK will be more than £70,000 by end of the decade
- Labour's Emma Reynolds says Tories paying 'lip service to aspiration'
- Warns housing shortage will hit 1.3million, three times size of Birmingham
- Nationwide says average prices hit record high of £188,949 in July
- Annual uplift fell back from 11.8 per cent in June to 10.6 per cent in July
By Matt Chorley, MailOnline Political Editor
House prices will soar to 13 times average wages before the end of the decade unless urgent action to build more homes, Labour warns today.
Shadow housing minister Emma Reynolds uses a speech today to accuse the Tories of paying ‘lip service to aspiration’ while home ownership has slumped to its lowest level since 1987.
The warning comes as Nationwide reported house prices increased to another new all-time high of £188,949 on average in July, although the pace of growth is showing signs of slowing.
Labour claims that on current trends, average house prices in the UK will hit £358,834, and top £832,240 by 2020
In the latest stage of Labour’s summer offensive, Miss Reynolds releases analysis showing the cost of an average home will reach £359,000 by 2020.
On current trends, London prices are forecast to hit £832,240 within six years. It also claims that by 2020 the average deposit in the UK will be more than £70,000.
It is claimed that by 2020 the housing shortage will have hit 1.3 million homes, the equivalent of three cities the size of Birmingham.
In a speech in Nottingham, Miss Reynolds will say: 'While the Tories say the housing market is back on track, the truth is they’ve presided over the lowest level of house building since the 1920s.
'We’re not even building half the homes we need to keep up with demand.’
Chancellor George Osborne launched the multi-billion pound Help to Buy scheme to help people struggling to afford a deposit onto the housing ladder.
Shadow housing minister Emma Reynolds accuses the Tories of paying lip service to aspiration
But Labour claims the scheme, which has helped thousands of people buy their first home, has only fuelled demand without addressing the shortage of properties available, pushing up prices.
Latest figures show that house prices paid by first-time buyers are up 11.3 per cent year-on-year, compared to 10.7 per cent for people who already home a property.
Miss Reynolds adds: ‘The Tories claim to be the party of home ownership. But on their watch home ownership has fallen to its lowest point since 1987.
'The Tories pay lip service to aspiration and home ownership but they’re not willing to take the action necessary to deliver the homes we need to meet these aspirations.
'The only way to ensure more people can buy their own home is to build many more homes. That is the litmus test of aspiration today.'
Latest figures from Nationwide said property prices rose by 0.1 per cent month-on-month across the UK, marking the smallest rise seen in 15 months as stricter mortgage lending rules helped to fuel a slowdown in activity, the building society said.
On a year-on-year basis, growth in values remained in double digits for the fourth month in a row, although the pace of the annual uplift fell back from 11.8 per cent in June to 10.6 per cent in July.
Robert Gardner, chief economist at Nationwide, said the winding down of price growth 'was not entirely unexpected, given mounting evidence of a moderation in activity in recent months'.
Miss Reynolds will claim that Labour councils are planning to build more homes than Conservative or Liberal Democrat councils.
According to the party’s analysis, Labour authorities are committed to building 862 homes a year, compared with 508 by Tory councils and 393 by Lib Dems.
She will point to Labour’s plans to build at least 200,000 new homes a year, put an end to land-banking and reform the housebuilding industry to make it more competitive.
However, the Conservatives said that in government Labour promised to build 240,000 homes a year and barely reached half that number.
Average deposits in the UK are on course to reach £71,767, according to Labour analysis
Tory housing minister Brandon Lewis said: ‘Under the last government Britain was building fewer homes than at any time since the 1920’s. Labour’s record on housing was truly appalling.
'By contrast, housebuilding is now at its highest for a number of years and we have already delivered over 445,000 new homes, including 200,000 affordable homes.
'There is still more to do, but the real threat to this recovering housing market would be a Labour Government. Labour would cut housebuilding through taxes and red tape – and it’s hardworking taxpayers who would pay the price for this failure.'
The Bank of England has suggested interest rates will rise before the election, with house prices soaring by 10 per cent year-on-year.
But yesterday Labour's shadow chanellor Ed Balls said the hike in mortgage bills was the fault of the government. 'Already today, even before living standards have stopped falling, this government's failure to get more houses built means there is now a real risk that interest rates will rise prematurely to rein in an unbalanced housing market.'