George Osborne has called for people to be vigilant about the prospect of a housing bubble, which many are saying is being fuelled by Help to Buy.
“Absolutely we should be vigilant and we have created in the Bank of England the mechanism for that vigilance,” the chancellor of the exchequer told the House of Lords economic affairs committee, making reference to the Financial Policy Committee, which has regulatory powers over the banking sector.
Many critics have called for the government’s flagship housing policy to be diluted or stopped altogether, amid fears it is causing house prices to rocket.
However, Osborne said Help to Buy was supporting mortgage lending primarily to first-time buyers and for properties not in the capital, suggesting the scheme is doing “what it is designed to do”, which is to address a failure in the financial system, rather than the housing market.
The chancellor also pointed out that housebuilding rates were rising to try to cope with the surge in demand, but conceded that it was an issue that would not be solved quickly, calling it a historic problem.