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News: Stop Help to Buy: London house prices want to get off

Mon, 27 Jan 14

The government’s scheme to support mortgage lending is designed to encourage more buyers onto the property ladder, making mortgages more accessible for those who were previously unable to afford to purchase a home. With housing supply still a severe problem, though, rising demand and limited stock has seen house prices rise significantly.

Property values in the UK jumped 5.4 per cent in November 2013 compared to November 2012, according to the Office for National Statistics. In London, values leapt even higher, rocketing 11.6 per cent annually. While many experts have recently played down concerns over a housing bubble, citing increased activity further up the supply chain from second home movers as a way to meet demand, insurance and investment firm Legal & General have called time on the scheme.

Speaking to The Telegraph, the firm’s Chief Executive Nigel Wilson said that the risk of a bubble could push house prices out of the reach of the majority of home buyers, with property prices in London and the South East already at "absurd" levels.

"Help to Buy turbo-charges an already rising market inside London – stopping it would be economically sensible and help prevent the North-South divide getting even wider,” he said.

"[The UK government] should stop stoking up demand, there is already lots of demand and this will create a bubble for the future. There is a UK obsession with housing and our growth is excessively dependent on it."


His comments were echoed by Home.co.uk director Doug Shephard, who said,

"London continues to astound housing analysts, buyers and vendors alike, and it clearly does not require any further stimulation. The fact that the growth is stronger than the boom in 2007 may well be welcomed by vendors but only if they are not also looking to buy a further property in the capital, as the competition is vicious.

Investment and government schemes need to be focused on the areas of the UK that are struggling, hence our calls for the Help to Buy scheme to be implemented in a more targeted manner. Such vote-winning schemes will not help in vibrant markets such as London; instead they will simply serve to further elevate already spiralling prices."


See also: London's Bigger Boom

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