Help To Buy inflating new build prices

The residential research associate director of Cushman & Wakefield says there is now evidence that the Help to Buy equity loan scheme is effectively helping to inflate the prices of new build homes.

Lee Layton says that the 12 months following the scheme’s introduction in spring 2013 produced a 32 per cent increase in the number of first time buyer mortgages.

“However, to place this into context, the 12 months preceding its introduction witnessed a 45 per cent increase, suggesting that there was already a rapidly growing number of first time buyers entering the market” says Layton in the company’s latest market analysis.

He goes on to say that until recently there had been little evidence that the scheme had helped inflate prices of new build homes, which the scheme insists its users buy.

But Layton then says: “However, the previous year or so has witnessed the rate of house price inflation of new homes considerably outstrip the second hand market. If we are to trust [the government’s] UK House Price Index data, this would suggest that the scheme does indeed place upward pressure on prices.”


Written by: Houseladder