Member Article

Don’t pull up the housing ladder for North Easterners, government warned

• Regional housing prices still as much as 20% below peak • “There is no housing bubble in the North East… national measures driven by London’s needs won’t work here, or anywhere else for that matter“

A housing boss has warned thousands of North Easterners may never get a foot on the property ladder if the government takes “ill-judged and ill-advised” steps to avoid a bubble in the housing market.

Ajay Jagota of North East sales and lettings firm KIS Lettings called on Chancellor George Osborne and the Bank of England to ignore calls to make it more difficult for people to secure mortgages - warning that “national measures driven by London’s needs won’t work here, or anywhere else for that matter”

Influential international think tank the OECD this week warned of the need for government action to dampen the housing market and slow spiralling house prices, advising the Chancellor and the Bank of England to take “measures to address the risks of excessive house price inflation”, including “tighter access” to credit.

Analysis of Land Registry data by property researchers Savills, however, shows current house prices in the North East to be still 15-20% below their 2007-08 peak, despite soaring by 19% a year in London and the South East.

Ajay, whose firm manages properties for 700 landlords from branches in Sunderland, South Shields, North Shields and Welwyn Garden City and which was named Letting Agent of the Year at the 2013 national Landlord and Letting Awards, said:

“For all the endless exaggeration and speculation in the media, politicians mustn’t lose sight of the simple fact that with house prices still as much as 20% below their peak, there is no housing bubble in the North East.

“There’s talk that the Bank of England’s Financial Policy Committee could take further action to curb the availability of credit as early as next month, despite stricter mortgage rules being introduced just two weeks ago.

“Doing that would be ill-judged and ill-advised and my fear is that it would do nothing to solve the problem but will stop thousands of North Easterner’s from ever getting a foot on the property ladder.

“Clearly the property market in London is a cause for concern, but much of that is being driven by foreign investors buying with cash. People getting £3000 through Help to Buy to buy a home worth £60,000 in the North East is hardly exacerbating that.

“The government needs to take a more nuanced approach. My own solution would be modest interest rate rises, and even then, not yet.

“Whatever they do, they need to recognise that the North East is a separate economy on a separate scale. National measures driven by London’s needs won’t work here, or anywhere else for that matter.”

This was posted in Bdaily's Members' News section by Ajay Jagota .