Brown soothes property fears - again

GORDON Brown made a second attempt within 24 hours to ease fears over the UK property market today.

The Chancellor pledged to maintain 'stability' in the housing market and dismissed suggestions that Bank of England Governor Mervyn King was predicting a house price crash.

He said: 'He did not actually say that. He said there are risks. There are obviously risks - we have got terrorism around the world, we have got oil prices that have gone up.

'We have to deal with all these. We got to ensure that throughout all these changes, massive changes taking place around the world, we maintain that stability.'

Brown, who was speaking on ITV's GMTV breakfast programme, said there had been stability for those buying a home for the past seven years and that meant low inflation and interest rates low in relation to the past.

Last night, during his annual speech at the Mansion House to the City of London's grandees, the Chancellor accepted that the UK economy's 'stop-go problem' of the past 50 years had been led or influenced by the housing market. But he insisted the cost of servicing debt was 'substantially lower' than 10 years ago and that the housing market remained strong.

He also reaffirmed plans to drastically increase housebuilding. 'Forty years ago we built 400,000 homes a year, By the mid 1990s it had fallen to just 200,000, so we will press ahead with resolution? to tackle the large and unacceptable imbalance between supply and demand in the British housing market.'

On Monday, Mervyn King said the surge in house prices, which have doubled since 1999, may no longer be sustainable. He cautioned that the 'chances of a fall in house prices are greater than they were'.

He also suggested anyone thinking about a move 'should consider carefully the possible future paths of house prices and interest rates'.

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