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Redrow chief warns on housing shortage

The chairman of one of Britain’s biggest housebuilders has called on the government to address the shortage of homes in the country or face the prospect of social unrest.

“There is massive pent up demand for home ownership in this country and something has to be done to solve the housing crisis or it could lead to social unrest,” said Steve Morgan, executive chairman of Redrow.

Mr Morgan, who founded Redrow in 1974 and returned to run it in March last year following a boardroom coup, said that the government needed to help ease the land market, because landowners are not selling.

“Vendors perceive [land] to be cheap at the moment, so they won’t sell. The government needs to release some of its holdings or encourage the banks to sell some of the land they have taken on, otherwise things will get very difficult,” Mr Morgan said.

Housebuilding has been one of the worst affected industries during the downturn, with falling consumer confidence causing property sales to tumble.

Mr Morgan added that mortgage availability was a significant hurdle for any sustained and meaningful recovery in market.

Since the middle of 2007 banks’ appetite to lend on property purchases has declined and during the first 11 months of last year just £48bn was lent to 456,000 prospective home owners, according to the Council of Mortgage Lenders. In 2006, £157.8bn was lent to 1.1m home owners.

In spite of the average cost of mortgage interest payments falling to a 13-year low at the end of 2009, the median size of deposits required for borrowers has risen by 8 per cent over the past two years to 28 per cent.

Alastair Stewart, analyst at Investec, said: “Banks are asking for a deposit that is some way out of reach for the vast majority of people, especially first-time buyers without significant help from the bank of mum and dad.”

Mr Morgan said that although the lending had been “out of control” before the downturn, he would welcome the return of 90-95 per cent mortgages