Projected UK ownership rates are dangerous, says economist

The idea that 70 - 80 per cent of UK residents should be homeowners has been slammed by a chief economist.

The idea that 70 - 80 per cent of UK residents should be homeowners has been slammed by a chief economist.

Ian Shepherdson, chief US economist for high frequency economics has labelled the idea "nuts" that such a number of Brits should own homes, claiming that this kind of perverse incentive has been contributing heavily towards the current housing market crisis.

Speaking at the Chartered Institute of Housing annual Harrogate conference, Shepherdson said: "It's hugely damaging when those who can't afford it are pushed in to home ownership.

"All that happens is they store up bigger problems for themselves. There's a limit to home ownership and to pull people in does everyone a massive disservice."

The news will add to the nervous predisposition of construction firms in the UK at present, which had been looking forward to a bumper building season following prime minister Gordon Brown's hope to build hundreds of thousands of new homes.

House prices have been recorded as rising continuously for years in the UK and fear of a crash have never truly been realised due, in part, to a sustained demand for new housing.

Shepherdson referred to the level of home ownership in the US, a figure which had stayed level at 65 per cent for 40 years, and argued that the housing collapse and credit crunch followed just a four per cent increase in ownership levels.

The Times' economics editor also agreed with the figures: "70 per cent of the population being homeowners is pretty much the maximum you should aim for. Eighty per cent was always a ridiculous aspiration for the government," said David Smith.