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Mr Osborne is expected to give more details about how he expects the Bank of England to tackle risks to financial stability posed by sharp rises in house prices in London and the southeast.
Many Conservative MPs are resistant to large-scale building in the countryside, so Mr Osborne will focus on developing “brownfield” sites in urban areas, drawing on the London mayor Boris Johnson’s idea for “housing zones” on such sites.
Mr Johnson has proposed investing public money in cleaning up former industrial areas, in exchange for deals with developers and local authorities to guarantee speedy housebuilding.
Mr Osborne will back the scheme in London with Treasury cash which Mr Johnson will match with money from City Hall. But the chancellor will extend it to other areas of Britain.
He will also set out planning reforms that could give an effective “presumption in favour of development” on brownfield sites.
Although housing starts have picked up in recent months, there will be scepticism about whether these reforms will be any more successful than previous efforts to boost building.
The chancellor is also expected to use his speech to discuss the tools the Bank has to tackle a housing bubble, described by governor Mark Carney last month as “the biggest risk to financial stability”.
Mr Carney will chair a meeting of the Bank’s Financial Policy Committee this month to discuss the question; Mr Osborne has indicated his support for limits to loan-to-income ratios banks offer, to ensure mortgages are affordable.
Housing starts have risen more than a third year-on-year in the first quarter of 2014 according to official figures, but they are still well below pre-credit crunch levels.
Some 108,400 homes were started in England in 2013/14, 26 per cent below the number in 2007/08.
John Forrester, Emea chief executive at property advisers DTZ, said site contamination was a major problem on former industrial land. Sites ranged from former docklands to factories, goods yards, car plants, scrap metal yards, fuel storage depots and even watchmakers’ factories. In these last, radioactive chemicals were used to colour watch dials.
“Sometimes the effect can be so restrictive that it ruins [financial] viability, so any support for sites that can be brought forward sooner would be great,” he said. “A lot of it is very well-positioned and offers great development opportunities. A lot of this land is generally in good places for affordable housing.”
Stuart Robinson, head of planning at consultancy CBRE, said many sites in the Midlands and the North needed decontamination “and that’s where the [housing] market needs the greatest boost”.
He also mentioned a 30-acre site in southeast London where contaminated soil from docklands was dumped in Victorian times. “They were thinking the city would never grow that far, but now there is a housing estate all around it,” he said. “London still has the residue of old industrial processes that have caused some sites to lie fallow for quite some time.”