Third response

Letter from Grant Shapps 21st April 2011:

Dear XXXX,

Thank you for your e-mail of March 30 in which you expressed your concerns about the Government's approach to supporting the housing market.

You make a number of important points in your emails about the challenges the market faces, in particular about house prices. As you might have read, what I've previously said is that if prices are relatively stable and don't rise at a rate exceeding average earnings growth, then this in itself would be helpful over the long term by reducing the price to earnings ratio. We want to avoid soaring prices which freeze out first time buyers.

In the long run we want houses to become more affordable whilst avoiding price falls which have many damaging impacts. Falling house prices are bad for homeowners and builders alike, increasing the number of repossessions and households unable to move due to negative equity. Falling prices also slow the building of new homes which will be needed for future generations. We don't want prices diving because whilst this might be an 'instant fix' in terms of affordability for some in the housing market, this would have many negative consequences for the wider market and economy.

Now, I don't think that Government can command all this to happen and this isn't going to change things overnight. This is a long term solution to a problem which previous administrations have tried to address with quick fixes like top-down housing targets.

To achieve a stable housing market, we need to build more homes and entrench sensible lending practices that strike a balance between allowing access to the mortgage market for creditworthy borrowers and yet prevent repossessions. In the long run, houses will become more affordable. That's our aim: a stable housing market that gives both home buyers and builders a solid base to invest for the future.

I appreciate the time you have taken to raise your concerns with the Department, and I hope that this responds to the points that you raised in your earlier e-mails.

Yours,

Grant Shapps.