Speaking on ITV news, Mr Cable said the UK is falling "way short" on the housing supply needed.
He said housing inflation is reaching dangerous levels, and the number of new homes being built needs to be increased. "Tough decisions" about using green belt areas for new planned cities, such as garden cities, will also need to be taken in the future, he added.
Cable said the Government is doing what it can to support social housing directly, but admitted that "there is always room for more"
"There is an enormous gap between what's needed, which is probably 300,000 houses a year as my party is advocating, and what we're currently getting, which is 125-130,000. We are way short on the housing supply which is needed."
Pointing specifically to "very serious" problems in London, where he said there is currently double-digit inflation, and house prices are "higher than before the crash" he added "Very large numbers of middle income families and indeed quite prosperous families can no longer get into the housing market,"
Low housing construction worries were also echoed at a recent conference in Manchester.
Speaking at the Financial Services Expo Manchester, which took place at Emirates Old Trafford, Stefano Silvestrin, part of the Economics Team at Nationwide Building Society said that the low level of housing construction taking place in the UK, especially compared to the yearly projections for new household formations, was a cause for concern.
Silvestrin commented:
“Housing construction statistics are trending upwards but we have a long way to go before it matches the expectations of household formation numbers. The big risk is that construction is lagging household formation.”
Robert Sinclair, Chief Executive of the Association of Mortgage Intermediaries, agreed and referred to the lack of housing being built as a “chronic systemic weakness’ in the market. He suggested all political parties needed to come up with a 10-year programme, prior to next year’s General Election, in order to meet the 200-300 thousand new properties needed each year to meet demand.
Silvestrin however did paint a relatively positive picture for both the UK economy as a whole and the housing and mortgage market saying that the economy looked to be rebalancing and that the latest data flows showed that investment has picked up.
Levels of first-time buyers had been steadily increasing since early 2012 and rates were near record lows across the full LTV spectrum. However Silvestrin did suggest that in key areas, notably the provision of high LTV mortgages, there was much more to be done.
He said:
“High LTV lending is still very much subdued. The second part of the Help to Buy scheme may have improved the supply of high LTV products but it looks quite limited at the moment. We are seeing that the higher the LTV the more likely the borrower will go for a fixed rate. ”
On the issue of increases to Bank Base Rate, Silvestrin said:
“The market is expecting the first increase in BBR to happen in May next year and from there rates are expected to increase gradually and slowly.”
