Date published: 2005/08/09
The BBC says:
John Prescott said the price of houses in Britain is too high except for people already on the property ladder.
The deputy prime minister was speaking as he unveiled the next stage of his plan for £60,000 starter homes.
Conservative spokeswoman Caroline Spelman claimed the £60,000 price tag was just for construction and said the final price would be much higher.
She added that 140 of the homes would be built next to Category A prisons and all would be on contaminated land.
But Mr Prescott said his plans had already defied critics and the new homes would help 1,000 families and first time buyers.
Asked if he thought the average house price in Britain was too high, he replied: "I think everybody thinks they are too high, unless you have bought one, and that's one of the problems of this present stage."
Asked how much he would like to see prices come down by, Mr Prescott said: "I would love to sell a £60,000 house. Wouldn't you like to buy one at £60,000?"
When pressed over the fact that house prices had doubled in the last six years, Mr Prescott replied: "I have to accept that is very much a function of the market.
In fact, the idea that I am coming along here, talking about £60,000 houses, is to recognise that the market is not able to produce it, if you take the land and the price, put it together, a house at £60,000.
"Unless you have some other arrangement, and we have shown a way forward.
"But I generally recognise, unless we lift the amount of houses in supply, we are not likely to reduce greatly that increase in prices in housing, which even now is two or three times people's yearly earnings."
Mr Prescott hit back at Tory claims he was using "contaminated land" to build cheap starter homes on.
"I thought the pressure was on me to build more and more on brownfield sites. And we have now reached a record level of 70%," he said.
"It is right that we do that, we are building back in the cities."
Nine finalists from a competition to create £60,000 homes will now be invited to design the houses for construction on public sector sites, he said.
The 1,000 homes will be a mixture of flats, houses - some rental, some for sale and a third being made available for first time buyers.
As usual Prescott manages to mangle what he is saying. House prices are way above two or three times people's yearly earnings and the recent annual percentage increases have also been way above two to three times the percentage increase in earnings. And he might joke about how wonderful it would be to pay £60000 for a house (the average price in Cambridge is near enough three times that) but who is going to win the lottery by being allowed to buy one of these £60000 homes? Presumably certain politically correct categories (e.g. public sector workers). Meanwhile the rest of the country suffers.
And anybody with any sense, even people who have bought a house, recognise that high house prices are a problem, because it is the delta to the next house on the ladder that determines how easy it is to move up the ladder, it is not just the first rung that matters. In 1990 the price of top-end houses in Cambridge was 300k pounds and of above-mid-range houses 100k pounds. Now those numbers are more like 1.5m and 500k. So the ratio is still 3 to 1 but the absolute difference is way above any possible increase in earning power during that time. So everybody is stuffed (except developers and people moving out of the UK).
The key to solving the "housing crisis" is not to build loads of new crap houses but to release much more land for housing, and let the market do the rest. Of course the ruling elite refuse to allow this to happen for all sorts of reasons. (There is plenty of land, in spite of what is often claimed.)
The Tories are just playing politics because everyone knew the £60000 was not counting the price of land (most buildings plots near Cambridge cost more than that, per household, so needless to say the full cost of any new-build house is much, much higher). And the Tories were in power when the housing crisis started (they in some sense encouraged it), and the Tories are the main party which wants to stop house building in the south of England. So they are part of the problem, not part of the solution. (The LibDems are not much better.)
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