Economist calls for Help to Buy diluting


In light of recent house price increases, an economist has suggested the Bank of England would do well to dilute the Help to Buy scheme.

According to data from the Office of National Statistics (ONS), house prices increased by 5.5 per cent in December 2013 compared with a year earlier, up from 5.4 per cent in November.
 
Dr Howard Archer, chief UK and European economist at IHS Global Insight, suggested diluting the scheme to avoid a housing bubble occurring, as he predicted house prices will increase by around eight per cent in 2014.

“Furthermore, there is a genuine possibility that this could prove to be a conservative forecast.”

He added there remained a “very real danger that house prices could really take off over the coming months”.

One suggestion he thought the Bank might take would be to lower the maximum property value in the government’s flagship housing policy. The current limit of £600,000 could be reduced by as much as £300,000. 

BBC business editor Robert Peston also recently suggested such a dilution was being considered by Mark Carney. However, this was later refuted. 

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