Budget to head off property meltdown

16 March 2004
Gordon Brown will use his Budget to head off potential problems with the housing market.

In his annual speech on Wednesday, analysts predict that the chancellor will announce tough new measures to curb runaway house prices and ensure that first-time buyers can afford a home.

Recent rises in the rate of borrowing, introduced by the Bank of England, have failed to cool house prices and concern is growing that a housing market crash could follow if the market does not slow down considerably.

The average cost of a home soared by more than £5,000 last month.

The Barker Report, due for release on Budget day, is expected to recommend that an extra 100,000 new homes need to be built each year. It is believed that Mr Brown will double the output of social housing, at a cost of £1.5 billion and will order a massive home building program, concentrated mainly in the South East.

Mr Brown and deputy prime minister John Prescott are expected to push through sweeping changes to planning laws in order to ensure more homes are built.

Measures to encourage families to opt for long-term fixed rate mortgages are also expected in the 2004 Budget.