The Centre for Economics and Business Research (CEBR) is predicting that U.K house prices will rise for another two years and the IMF concludes that they are already over-valued by 30 to 35%. Brighton & Hove’s greatest challenge is the provision of affordable housing for the workforce. Which prediction is right?
The CEBR argues that the growth in demand and the shortage of supply will continue to force prices up especially in the south east where changing social patterns e.g. more people living alone, exacerbate the problem. A report by Shelter released this week suggests that the government will need to build an extra 55,000 homes (at a cost of £3.5bn) annually to meet demand.
The CEBR do concede that this year and next will see a gradual slackening in the rate on increase with prices falling in real terms in 2006. The stimulus for this reduction will be the point at which mortgage levels become so high that they cease to be realistic compared to annual income. This “tipping point” is crucial but other commentators argue that this point has already been reached and that buy-to-let purchases will shortly replace first time buyers.
The Brighton & Hove Economic Partnership commissioned Prof. Christine Whitehead of the LSE to research Brighton & Hove’s affordable housing problem and the results will be published shortly on this site.
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