House prices in Bermuda will continue to soar as long as the expanding economy brings more home-buyers to the Island, according to a high-profile social activist.

Stuart Hayward said Government needs to act to stop an “insane” spiral which has seen the average price of a stand-alone home on the Island hit $1.6 million. Mr. Hayward said the constant drive to expand the economy and boost tourism is creating a market where only the very rich can afford to buy.

The former Independent MP said that as more and more people are brought to the Island to work in the construction and tourism industries, there will always be somebody able to meet the ever-rising asking prices.

He said the only way to stop the trend was to moderate the number of businesses being set up in Bermuda.

Mr. Hayward — a former member of the Sustainable Development Round Table and author of the award-winning Bermuda’s Delicate Balance — was speaking after it was revealed the average 30-year mortgage would cost a new home-owner $11,400 a month at current interest rates.

“It’s out of the reach of even the wealthiest among the middle class,” he said. “It’s a testament to one aspect of development in Bermuda that’s just not sustainable. If the price of housing gets so high that many people are inadequately housed, you are really striking a blow against the order of every facet of the community.

“If people are spending very high amounts of money on their house, they have less money available to spend on everything else. The price will keep going up as long as people keep paying the prices. How do you influence housing prices? Economists I’ve listened to say you have an inverted proportionate ratio between demand and supply.

“If demand goes up and supply doesn’t, that enables people to charge high prices.”

Mr. Hayward said efforts to expand the economy were creating a vicious circle which Government needed to break.

“It’s really the dragon eating its own tail. We are devouring ourselves,” he said. “Everywhere you turn, a case is being made to expand the economy.

“They say we need more tourists. But our labour pool is limited, so in order to staff additional businesses, we have to import workers. Each worker we import brings an instant need for transportation, housing and food. This adds to the infrastructure, which therefore requires additional expenditure. This feeds the need for additional business.

“Unfortunately, the area where the throttle can be moderated, it’s not being — that is, the expansion of business. It would appear that the growth in the number of businesses starting up in Bermuda is not being moderated at all.

“One would find it easy to refer to it as insane. The only way it can be controlled is through the actions of the Government and treating our economy as something not existing on its own but as part of a sustainable development package.

“If one part gets out of control it affects the rest of it. I could imagine that a year from now, or five years from now, the number of people without housing will increase and the number of people who are spending far more will increase. It’s easy to feel extremely concerned.”

The Government has recently reiterated its aim to improve the supply of houses by creating “safe and adequate” affordable homes and claims 286 units are currently under contract, with more to come. These include the recently completed $4.5 million Anchorage Villas complex, and 18 three-bedroom and 36 two-bedroom homes at Southside each. The 110-unit Harbour View Village lottery-winner project is in progress, and other initiatives include the 96-unit Loughlands scheme, projects at Morgan’s Point and Beacon Hill, and 100 affordable rental units are planned on Ireland Island.

Housing Minister David Burch was unavailable for comment yesterday.