Boris Johnson’s latest proposal for the housing market is another risky, spontaneous announcement aimed at temporarily inflating the housing market according to a leading property firm.

DJ Alexander Ltd believes that the comments from the Prime Minister that he would be open to encouraging 50-year mortgages – with debt potentially being transferred to the next generation – are unhelpful and fail to address the significant, long-term issues in the housing market.

The Prime Minister’s comments may be aimed at encouraging greater home ownership but instead have the potential to encourage a short-term boom in the housing market followed by a long-term bust.

David Alexander, the chief executive officer of DJ Alexander Scotland, commented:

“Another month and another off the cuff housing policy touted by Boris Johnson. While these announcements attract headlines and perhaps energise parts of the electorate, they lack any sense of having been thought through.”

“The implications of 50-year mortgages are quite severe and coupled with the recent pronouncements on extending Right to Buy and enabling those on low incomes to use benefits to buy properties rather than rent seem to be ill thought through, back of the cigarette packet ideas rather than coherent housing policy.”

“Now is certainly not the moment to fuel growth in the housing market. Prices have risen at an unbelievable rate in recent years so any encouragement of the market should be treated with caution.

It is easy to forget that it took average house prices in Scotland nine years to recover from their peak in May 2008 after the last property crash occurred. It is also worth noting that average prices have risen by £42,313 since May 2008 to April 2022 but that £35,040 (82.2%) of that increase has occurred in the last two years since May 2020.”

“The housing market does not need longer mortgages, less stringent affordability criteria, or higher borrowing multiples. If you want to stabilise or reduce prices, then you need to increase supply.

Demand has been outstripping supply for years in both social housing and the private sector and unless this is resolved you will continue to see prices rising.”

“A more coherent approach would be to encourage more homebuilding through an easing of the planning system; much more social house building; and encouraging investment in the private rented sector to continue to meet the demands of people not currently buying and not eligible for social housing.

“A 50-year mortgage is simply temporarily sustaining the market and passing debt on to the next generation which does nothing to resolve the long-term underlying issues in the housing sector.”

Separately, analyst Anthony Codling, the CEO of Twindig commented:

“The Government is looking for creative ways to turn Generation Rent into Generation Buy, but do we really want to create Generation Debt?

“The Government has a problem. It wants to turn generation rent into generation buy, but the economy is working against them.

“House prices have risen by more than 25% since the start of the COVID-19 pandemic, much, much faster than wages.

“Costs of living are spiralling out of control, inflation is already at a 40-year high and expected to rise further and the Government wants us not to seek pay rises, but to seek pay restraint.

“Increasing the length of mortgages is not the answer. The numbers don’t add up, if house prices are rising faster than wages, and mortgages are based on wages then generation buy is shrinking not growing.

“In our view, the Government will struggle to keep both homeowners and aspiring homeowners happy, unless it stops pitting them against each other and finds a way for them to pull together.

“We believe that way is through fractional ownership.”

Government considering 50-year mortgages that children can inherit