An industry expert has called for the government to abolish or alter the Help to Buy scheme, to avoid creating a housing bubble.
Recent data from Halifax showed that house prices rose 7.7 per cent year-on-year in the three months up until November. This rise in house prices has been attributed largely to the government’s Help to Buy scheme.
Capital Economics property economist Matthew Pointon argues that the scheme should never have been introduced, especially the second stage, according to Mortgage Strategy.
“In terms of what I think will happen is the government will probably scale it back first – reducing the £600,000 [property] limit for example. But in terms of the best course of action I think is to get rid of it altogether,” he said.
The Bank of England has already refocused the Funding for Lending Scheme in an attempt to slow down the rise in house prices.
The government-guaranteed scheme, which offers aspirant first-time house buyers a hand in getting on the property ladder, requires just a five per cent deposit on a property worth no more than £600,000.