British finance minister George Osborne on Thursday vowed “radical” planning reforms and more powers for the central bank in an attempt to curb the country's spiralling house prices.
Making his keynote speech at London's Mansion House, the Chancellor of the Exchequer announced plans to build up to 200 000 homes, heeding the advice of the International Monetary Fund (IMF), which warned excessive demand was fuelling the boom.
He promised an “urban planning revolution”, in which the government could force local councils to allow housing developments on certain brownfield sites.
Osborne also revealed plans to strengthen the Bank of England's ability to impose restrictions on mortgage loan-to-value (LTV) and loan-to-income (LTI) ratios.
“We saw from the last crisis the dangerous temptations for politicians to leave the punch bowl where it is and keep the party going on for too long,” said Osborne.
“I want to make sure that the Bank of England has all the weapons it needs to guard against risks in the housing market.
“I want to protect those who own homes, protect those who aspire to own a home, and protect the millions who suffer when boom turns to bust.”
Despite the IMF warning, Osborne insisted that house prices were of “no immediate cause for alarm”, pointing out that house prices are still lower in real terms than they were in 2007.
“Does the housing market pose an immediate threat to financial stability today? No, it doesn't,” he said.
“Could it in the future? Yes, it could, especially if we don't learn the lessons of the past. So we act now to insure ourselves against future problems before they can materialise.”
Osborne accepted that his planning proposals would have to clear a lot of hurdles before becoming law, pointing out that previous reforms had been “hard-fought and controversial”. - Sapa-AFP