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So We’re Going To Increase The Supply Of New Houses Are We?

By Andy Shaw | January 23, 2010

Originally Posted 12th July 2007

The new Prime Minister is definitely going for the headlines with this one. I think property is our nations favourite subject so this should help to keep him in the headlines and carry through the ‘good feeling’ factor.

He announced yesterday that he would increase the new building program from it’s current target of 200k to 240k. He’s intending to hit this figure annually by 2016 which could be realistic. Obviously they are not yet hitting the 200k target and in the Times it said that they hit 185k last year but I don’t know if I believe that as their figures are not always accurate.

This figure still is somewhat short of what I think is really necessary say around 300k but at least they are admitting that there is a real problem now. I think all of these efforts will mean that the problem only gets worse rather than getting really bad.

He didn’t bother saying where these homes would go, or who they would go to, or what they would look like so we’ll just have to wait and see on that one as they are apparently releasing details of those little details next week.

The biggest problem I see is (as I have said before) not just the number of new homes but where they are built and I think that this will be a key element to seeing what effect this will have on the UK property market. As before this announcement I was thinking that if they didn’t do something that the market value would spiral up so much that there could be another short term bust, especially if they continued the fight to keep inflation at 2% (see my earlier post on that one).

Of course the bust would recover but it would lead to instability in the property market which is what everyone is trying to avoid. But as I’ve said, it doesn’t matter to me which way the market goes as it’s always a good time to buy, you just need to buy the right property.

My forecast is still for strong growth and further signs today regarding the dollar and the US housing market troubles may help to keep the likelihood of further rate rises under control for a while. But then who knows with these guys as they are trying to hit an unattainable target in my view by trying to buck the markets.

Best Wishes

Andy

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