George Osborne to announce plans to tackle UK’s housing problem

Today UK chancellor, George Osborne will present Autumn statement to the parliament around 12:30 GMT, where he is expected to announce measures to tackle UK's housing problem.

For the past 5 year, while wages remained almost stagnant across UK, house prices rose by 60%. Even now, wages are rising at 3% rate, much lower than close to 7% rise in house prices. Situation is worst in London, where a place below stair cases cost £500 per month. UK is just not building enough houses.

Yesterday, Bank of England (BOE) governor Mark Carney discussed the issue while in talk with treasury select committee, calling it a problem for both MPC and FPC. While overall inflation remains weak and wages low Bank of England just can't take measures to curb house price inflation.

Despite record low interest rates, unlike Australia and New Zealand UK's housing problem remains a supply side phenomenon.

To tackle the issue and to bring closer the alienated electorates, over his sharp spending cuts, George Osborne is set to announce biggest house building plan in more than 40 years. The plan is expected to take up measures such as providing discounts and subsidies to help people buy houses.

Some criticism exists that such schemes will again artificially increase the house prices and make the government lose the money in increased price. To tackle that Mr. Osborne is likely to announce building of as many as 400,000 new homes in England.