There is no housing bubble in the UK as a result of Help to Buy, according to a new publication.

The Institute for Fiscal Studies’ Green Budget 2014 report claims the government’s flagship housing policy has not caused a housing bubble, although it recommends lending could be limited to first-time buyers.

In response to the criticism the scheme has attracted for raising house prices, the report said: “On balance, the data currently available does not provide clear evidence of a housing bubble, even in London – though the likelihood of a bubble is greatest there.”

It explained such a situation arises when price trajectories are driven largely by speculative buying, based on expected future price increases, rather than by economic ‘fundamentals’ – such as improving underlying conditions and making access to finance easier.

The report also offered suggestions to tame fears and any negative ramifications of the scheme.

It recommended the policy should be refocused on first-time buyers or, alternatively, the maximum property value – currently £600,000 – should be lowered. It also suggested restricting the Help to Buy mortgage guarantee exclusively to new-builds, if the government was concerned about a house bubble emerging.