Professor Miles, chief economist at Morgan Stanley and non-executive director at the FSA, spoke of his scepticism as he presented a research report conducted by IPSOS UK on first-time buyers this week at the House of Commons.
Miles praised the research and in his analysis emphasised that while the number of first-time buyers is falling, it is wrong to assume it is falling simply because they are being priced out of the market.
He said: “Firstly, I remain sceptical about the merits of seeing the rate of owner-occupation as some sort of barometer of national welfare. Having a target that the owner-occupation level should be, the government has mentioned 80 per cent, makes little sense if more young people now see advantages to postponing buying a house.
“Secondly, aiming to bring down house prices by using a tap of new house building – especially if the target level of prices is based on factors like the average age at which people buy their first property or overall owner-occupation rates – is not very desirable.”
He added: “A world in which more young people have debts before they become homeowners – and in which the ratio of their first mortgage to their income may need to be higher – is one where their understanding of the future possible cost of their mortgage has never been more important.”
Another prominent issue raised during the House of Commons breakfast debate concerned the small amount of detail actually known about Gordon Brown’s shared equity plans.
Michael Coogan, director-general of the Council of Mortgage Lenders (CML), said: “The full details are yet to be revealed but we are currently working with a select number of lenders to see if the initiative will lead to sufficient business volumes.”
