Proposals in the Barker report, which emerged five days later than Miles’ review of the long-term fixed rate mortgage market, were warmly welcomed by the government which committed itself to a series of reforms backed by an ongoing £22 billion funding package.
Chancellor, Gordon Brown said: “I hope that over the next year all parties will study the Barker proposals.”
He went on to say: “The report by Kate Barker concludes that the supply of new homes consistently lags behind demand and that the numbers of houses built must rise substantially if we are to reduce house price inflation and increase the number of affordable homes for people wishing to buy and rent.”
Kate Barker reported a direct relationship between housing supply and house prices. She said to bring the UK real price trend in line with the EU average of 1.1 per cent, 120,000 houses each year would have to be built.
Barker recommended a series of infrastructural reforms and that the government set out achievable goals for improved market affordability. She also concluded that to deliver social housing needs, an additional £1.2 to £1.6 billion would be needed each year to ‘meet projected needs’.
Deputy Prime Minister, John Prescott said the government accepted the need for wide-ranging reform, which included restructuring planning policy at a local and national level, providing incentives for housing development and further public private partnerships.
A consultation document has also been launched into how to encourage investment through retail property investment funds and provide tax incentives to spur on the development of brownfield sites.
