Prime Minister Gordon Brown said he expects U.K. house prices to “stabilize” on increasing demand from first-time buyers.
“There’s a pent-up demand for housing,” Brown told reporters at an event in Cardiff, Wales today. “Lots of young people want to get their first step on the housing ladder and are being prevented from doing so at the moment.”
Banks have squeezed credit to help rebuild balance sheets after the financial crisis, making it harder for potential homebuyers to get mortgage loans. The number of Britons seeking a property for the first time has fallen to the lowest in almost two decades, London-based GfK NOP said today. The report suggests the housing-market recovery may be losing momentum before a May 6 national election that Brown is fighting on his record for managing the economy.
“In Britain, there is more demand,” Brown said. “We didn’t overbuild houses and in some cases, we haven’t built enough houses for the demand that is there and so I would expect property prices to stabilize. I would also expect young buyers to get relatively low interest rates.”
To aid first-time buyers, the government last month scrapped a tax on house purchases for those spending less than 250,000 pounds ($384,000). Brown said the government also promoted funded shared-equity programs, where lenders and homebuilders take a stake in the property alongside the private buyer.
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