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EDITIONS
Tuesday, 16 July, 2002, 11:09 GMT 12:09 UK
Housing plan 'will not cool prices'
For Sale signs
The average property in London now costs nearly 200,000
The extra money earmarked for spending on housing by the government is unlikely to have much impact on rising house prices, property experts said.

In Monday's Comprehensive Spending Review, the Chancellor Gordon Brown announced a 1.4bn boost for social housing in an effort to help key public sector workers to buy homes.

The house building programme is expected to be concentrated in London and the South East, where prices have risen the fastest in recent years.

But experts say that if the move was to have any impact at all on house prices, it would not come for many years.

Boosting supply

Full details of the house building programme will be announced on Thursday.

There is speculation that plans to build about 200,000 affordable homes in the South East will be announced.

But the length of time it will take to build these homes means experts think there will be little impact on house price growth

"It depends on how fast you can introduce the housing," Ray Barrowdale at the Royal Institution of Chartered Surveyors (RICS) told BBC News Online.

"At the moment one of the major driving factors in terms of housing, particularly in London and the South East, is lack of supply."

'No impact'

The institution has said that last year while the number of households needing property rose by 207,000, only 126,000 new homes were built, leaving a gap of 81,000.

Next year the shortage is expected to be 60,000.

"The question mark is really where the houses are going to be, what type of houses, and how fast they're introduced," Mr Barrowdale said..

"In the short-term I don't think [the programme] would have an impact on house prices."

Long-term impact?

According to the latest survey from the Halifax bank, the average cost of a property in London is 195,391, while in the South East it is 168,003.

Halifax group economist Martin Ellis said the new programme would not be big enough to alter prices yet, although you could see a change in a few years time.

"In terms of short-term impact it will have none to a very, very minor impact on house price inflation because it's a bit of a drop in the ocean," he said.

"Its impact is likely to be more medium to long-term once the programme becomes more established.

"Then you would expect it to have some modest impact in reducing the overall level of house price inflation."


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