House prices set to fall under government plans, minister admits

Matthew Pennycook told MPs that by setting a target of 1.5 million new homes the government will be responsible for hitting property prices.

Housing minister Matthew Pennycook (pictured) has admitted Labour’s plans to build 1.5 million new homes will hit property prices.

He told the House of Commons the “best scenario” was a “levelling-off” in house price growth.

The Labour Government has set a target of 1.5 million homes to be built by 2029.

“If you flood a local housing market with homes of any tenure, you will have a positive impact on housing affordability,” he said.

Pennycook said a 1% increase in housing supply would force prices down 2%, the Daily Telegraph reports.

But he also predicted that the fall in prices would be gradual rather than sharp.

I think the best scenario that we can expect is a sustained levelling-off of house price growth.”

“It will take some time – even if we had high and sustained rates of housebuilding of the kind that we hope the reforms we’re making will secure – to see house prices drop,” Pennycook said.

“I think the best scenario that we can expect is a sustained levelling-off of house price growth, and then a gradual easing of it over time.”

Meanwhile, less than 1% of civil servants on the front line of housing delivery think that the 1.5 million target is achievable, according to new data from public sector procurement firm Pagabo.

Earlier this week, the latest Halifax HPI revealed average house prices topped £300,000 for the first time after a 0.7% rise in January.

The increase last month followed a 0.5% fall in December, and the average property price is now £300,077.

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