Leaders spurn Cable’s house-bubble call

A rift has emerged at the top of the Liberal Democrats after a senior Cabinet member said the north-east was on the brink of the type of housing market bubble which caused the global financial crash.

Business Secretary Vince Cable warned that a flagship UK Government scheme should not go ahead because of “serious housing inflationary pressures”.

But Lib Dem leader Nick Clegg and chief Treasury secretary Danny Alexander dismissed the claims yesterday, saying “we are amillion miles away from a housing bubble”.

Mr Cable called lastweek for the coalition government to rethink Chancellor George Osborne's Help to Buy scheme – which will allow people to buy homes up to £600,000 on a 5% deposit – because it could create an unsustainable boom.

He singled out the northeast and London as the key problem areas, saying “we don’t want a new housing bubble”.

The 2008 financial crisis was related to the bursting of real estate bubbles around the world.

Recent figures suggest house prices in parts of Aberdeen and Aberdeenshire are rising at a rate of£1,000 a week.

A report from the Aberdeen Solicitors’ Property Centre ( ASPC) in July showed that average prices in Aberdeen and its suburbs were 5.4% higher than in the first three months of the year.

But Mr Cable’s warning was rubbished by the Lib Dem leadership yesterday at the party’s conference in Glasgow.

Mr Alexander, the MP for Inverness, Nairn, Badenoch and Strathspey, said: “We are a million miles away from a housing bubble in this country.

“Of course in central London, in Kensington and Chelsea, you see very high house prices, but I don’t think we should allow the tail of central London to wag the dog of this policy.

“Right now the problem in this country, the problem in my constituency in Inverness or here in Glasgow or across vast areas of England and Wales, is not a housing boom.

“It is getting construction going, it’s getting opportunities for people to own their own home.”

John MacRae, chairman of the Aberdeen Solicitors’ Property Centre, confirmed that house prices were rising rapidly in the Aberdeen area.

“Aberdeen has had a recovery in its housing market in the last year-anda-half. Over 5% in a quarter is a big increase.”

Vince Cable