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Invest now in providing the homes all workers can afford

With just 10 per cent of Scotland's population producing 26 per cent of Scotland's GDP and almost full employment, it shouldn't come as a shock that house prices in the North East of Scotland are growing faster than anywhere else outside London.

Halifax recently announced that the top five coastal towns in the UK for property value growth in the last 10 years were all in Aberdeenshire.

Over the last few weeks we have heard speculation that the Bank of England will steadily increase interest rates to avoid excessive lending and to take the heat out of house prices. Lloyds Bank announced that it would limit lending to four times salary on some higher-value homes.

Mortgage lending rules have been redesigned to test the affordability of new mortgages and take account of higher rates in the future. The focus is once again on the banks when perhaps it should be on our planning and development systems.

Banks and council planners don't build homes, developers do. However, local strategic planners estimate future needs and have a hand to play in encouraging developers to meet it. It's a matter of basic economics that with high demand and low supply, prices will rise.

Planners have increased housing land allocations but this is not in itself sufficient. Delivery requires allocations to be in the right place - where people want to live - and financing to be right for developers with lending available and the cost of infrastructure not constraining delivery.

If these criteria are not met it is likely that simply allocating more housing land will actually fix the backlog. Price rises in the North East are driven by low unemployment and the attractiveness of a region in which people want to live. The problem is when the cost of property becomes a barrier to growth, and when people with the right skills can't afford to work here.

House prices in the North East started to bounce back around five years ago. In the first quarter of 2014, house sales in Aberdeen increased by 8 per cent compared with the previous year. In the current quarter, the busiest in any year, prices are expected to have grown even faster.

There is no doubt that this region can provide more growth for Scotland, so we need to invest in providing the homes that all workers can afford.

The rising traffic levels on the A90 on a Monday and Friday attest to the numbers of workers spending their weekends elsewhere. Speeding up the supply of new homes will help to take the heat out of the market - and the road congestion - and fuel economic growth.

Liam Smyth is membership director at Aberdeen & Grampian Chamber of Commerce

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