NEW homes costing just £60,000 could be the key to resolving York's housing issues, according to a Government minister.

Housing Minister Keith Hill, speaking at York Racecourse, said the Government would work closely with Liberal Democrat-controlled City of York Council to "ensure that everybody lives in a decent home in a decent neighbourhood".

He said more development on previously developed, or "brownfield", sites could tackle the city's high house prices, with the aim of producing affordable homes for £60,000.

Mr Hill was in York to explain sweeping changes in housing legislation to industry representatives from across the country.

The Government says its new Housing Act will encourage home ownership and revitalise private rented properties. Mr Hill told the Evening Press: "The Government is working hard to ensure that all those who aspire to home ownership should be able to get on the housing ladder.

"We hope local authorities like City of York Council will work in a positive way with developers to identify where there is an opportunity for affordable home building."

Ann Reid, executive member for planning on City of York Council, said: "We were elected on a manifesto of brownfield before greenfield, and we already have a good track record on development on brownfield sites. In the last three years, over 80 per cent of development in York has been on brownfield land.

"On most developments we are getting 25 per cent affordable homes, and we hope to increase that to 50 per cent.

"The council doesn't have any control over house prices, but we do recognise the difficulties that face first-time buyers and people on low incomes, and we are addressing those problems so far as we are able."

Meanwhile, Mr Hill said he had not yet seen any evidence that discounts available to York council tenants wanting to buy their homes should be cut.

The Evening Press reported yesterday that a City of York Council report suggested the maximum discount under right-to-buy legislation should be reduced from £24,000.

Mr Hill said: "If there is a representation from York we will look at it very carefully. Two years ago the Government did reduce the discount on right-to-buy properties in 41 areas, on the basis of a very careful calculation of housing need and the level of homelessness. The objective then was to restrain right-to-buy sales.

"We continue to monitor housing pressures in all local authorities, including York, but we have not yet seen any evidence which supports extending these right-to-buy discount reductions."

Updated: 10:21 Friday, February 25, 2005