Prices set to continue to rise as help-to-buy scheme drive's inflation housing market
House prices surged further beyond the average person's reach in 2013 with a full-year 7.5 per cent rise to December the biggest in six years, Halifax bank revealed yesterday.
Prices are likely to shoot up even further this year as a lack of new homes and the government's controversial help-to-buy scheme combine to drive inflation in the market.
Taxpayer-backed help-to-buy sees our money used to underwrite high-risk 95 per cent mortgages that banks had stopped handing out to avoid bad debt.
But Left Economic Advisory Panel co-ordinator Andrew Fisher said: "With house prices rising at nearly 10 times the rate of wages, more mortgage funding is not the solution.
"If interest rates rise, as many predict in the next 18 months, many people could end up being burned by this scheme."
He said that an urgent mass council house-building programme was needed instead.
"This would help those in most housing need, for whom help-to-buy does nothing and be a far better economic stimulus than inflating another debt bubble."
In the Commons yesterday shadow communities secretary Hilary Benn (right)called for an end to speculation where greedy investors buy land, gain planning permission and sit on it, sometimes for years, until prices rise so that they can cash in the profits.
Mr Benn said local authorities should be able to tell companies to "get on and build the houses you said you would" and slap them with a levy if they don't comply.
But he stopped short of committing a Labour government to a centrally funded building scheme.
However Tory MP Alec Shelbrooke accused Labour of planning "Stalinist tactics of land seizure" if they win the 2015 election.