Speaking at Labour’s annual conference in Brighton Balls said a chronic shortage of housing is driving prices up out of the reach of many families and warned that the government’s plan to stimulate the market isn’t working.
Balls said: “If you push up housing demand, but don’t act to boost housing supply, all that happens is that you push house prices up and up.
“The end result is that the very people the policy should be helping – young first-time buyers - will find it even harder to get on the housing ladder.”
Since the Help to Buy Scheme was launched in March both the Bank of England and the International Monetary Fund have expressed concerns that the government is boosting demand without addressing supply issues.
Recent weeks have also seen deputy prime minister Nick Clegg and business secretary Vince Cable express concerns about the scheme.
Cable expressed concern that it could lead to an "old-fashioned property boom" and called on the Chancellor to review the policy.
Whilst Clegg was less sceptical he did say that the government must remain “vigilant about what is happening in the housing market."
Balls’ call to action and recent debate about potential issues which could result from the scheme has been welcomed by the industry.
Stephen Smith, director of housing and external affairs at Legal & General Network, said: “We welcome the emphasis on the need for urgent action on housing from across the political spectrum and it is reassuring to see that all three mainstream parties now recognise that housing supply is a key issue for the UK for the remainder of this decade and beyond.
“What we want to see now is firm commitments from both government and opposition to dramatically increasing supply in the UK housing market as well as further practical steps to enable the private sector to play its part.”
