Housing shortage will help the market recover

The UK property market is likely to bounce back before those of other countries because "we failed" to build enough houses, Gordon Brown has said.

In a recent speech at Reuters, the prime minister told a City audience the UK had “failed” to build enough houses and had a “pent-up demand”.

In contrast to Spain and the United States who had “overbuilt”, the shortage of housing created a demand in the UK. Gordon Brown said how the UK problem was not shortage of homes at "the right prices" but rather a shortage of mortgages "at the right prices for people to buy". The demand was around 300,000 a year and we only built 200,000. As a condition of its £37bn cash injection, the government wants RBS and Lloyds TSB to boost loans to house buyers and small businesses.

"I think the housing market in Britain therefore has a better chance of starting more quickly again than the housing market in the States (US) or Spain - but that's a relative judgement," Mr Brown added.