A call from the independent think tank, the ESRI, to reduce investment in building has been sharply criticised by the construction industry. In a major report issued earlier on Friday, the ESRI also questioned whether mortgage interest relief should continue.
In its medium-term review, the ESRI raised serious concerns about the booming construction sector, which employs 250,000 people. The institute said the building sector was vulnerable to an economic shock.
If this were to happen, it could double unemployment and reduce house prices by up to a third. As a result, the ESRI called for less money to be pumped into the sector.
But the Construction Industry Federation said there was very strong demand for property, and less home building in this market would result only in higher house prices. It also took issue with the ESRI's suggestion of scrapping mortgage interest relief, saying this would hurt first-time home buyers.
