Housing boost crucial

In a speech to the CBI North-East Annual Dinner, CBI director-general, John Cridland, said that boosting activity in the housing market and construction sector could be a major “game-changer” for growth.

Ahead of the Autumn Statement, Mr Cridland called on the Chancellor to consider a number of measures to help first-time buyers, people who want to move up the property ladder, and the construction industry.

Mr Cridland said: Bolstering infrastructure spending investment on transport, power stations and housing is one of the biggest and most effective levers the Government has to pull.

“It will help unlock some of the £60 billion of potential investment currently on company balance sheets and could create new jobs into the bargain.”

On the housing market and construction, Mr Cridland said: “Owning a home has been a natural aspiration for generations of Britons since the 1950s. It has never been easy but after this recession, the high cost of property, strict lending rules and the need to save substantial deposits has put home ownership out of reach for all but the lucky few.

“As we have seen, without a steady stream of eager first-time buyers the housing market stagnates and our whole economy suffers.

“According to the Council of Mortgage Lenders 36,200 first time buyers bought homes in the first three months of this year compared to 43,600 in the first three months of 2010. This compares with 167,400 first time buyers at the peak of the market in 2001.

“The National Housing Federation says that the average age for home buyers without parental assistance is now 37 and is expected to climb to 43 as more people struggle to raise hefty deposits.

“Now is the time to stop the stagnation and get the housing market flowing again.

“The CBI wants to see a revitalised Mortgage Indemnity Guarantee, to reduce the risk of higher loan to value mortgages. One way this could be done would be through a deal between mortgage providers and house builders. There could also be a role for government to step in with some very focused support to bridge the gap.

“Another way of helping first-time buyers to access finance to get on the property ladder could be to allow them to access locked savings in their personal pension pots through a loan-back scheme. Members of company schemes could borrow money from their own pension pot at a low cost, paying the loan back through their salary at any time during their working life.

“Also worth further exploration is Shared Ownership. It was successful during the Thatcher years and a new 21st century model of ownership could make a difference.

“I want to see the Chancellor use his autumn statement on 29 November to jump-start the housing market.

“A determined attack on the major blockers of finance and planning, could transform the outlook of a generation of young people and provide a huge fillip to consumer and business confidence.”