Regions

Osborne's Help to Buy scheme risks creating a new housing bubble

July 23
1:35 PM 2013

The Help to Buy scheme was George Osborne's latest attempt at kickstarting the economy. The scheme would partially guarantee GBP130 billion low-deposit mortgages.

However, the scheme has been criticized by both economists and campaigners. Critics warned that the scheme risks driving up house prices. This "could cause a bubble and encourage people to take on huge mortgages that could be devastating in the long run," according to the Homeowners Alliance.

"The housing market needs help to supply, not help to buy, and the extension of this scheme is very dangerous ... the world must have gone mad for us to now be discussing endless taxpayer guarantees for mortgages," said Graeme Leach, chief economist at business organisation the Institute of Directors. Leach added that the focus of the government should be on relaxing planning laws so that citizens can build homes in an easier manner.

However, Michael Pearce, assistant economist at Capital Economics, said that: "While the policy has been criticised for its ropey economics, it may be more successful politically. Indeed, the risk that it pushes up house prices may be positive for the Conservatives' election chances in 2015."

© 2023 VCPOST, All rights reserved. Do not reproduce without permission.
Tags
Share

Comments

Join the Conversation

Subscribe to VCpost newsletter

Sign up for our Deals of the Day newsletter.
We will not spam you!

Real Time Analytics