Despite criticism from industry experts, the government's Help to Buy scheme is showing results in the UK property market. The Royal Institute of Chartered Surveyors' (Rics) Residential Market Survey showed the government's announcement of the programme has had an immediate impact on sentiment. All key indicators revealed improvement in April, except in sales to stock ratio.
New buyer enquiries had a net balance of 25 - the seventh positive result in the last eight months and the highest reading since November 2009. Rics claims the Funding for Lending Scheme has helped with this, bringing down mortgage rates and encouraging banks to lend higher multiples. However, it is confident that the latest surge in enquiries in the result of Help to Buy, despite the fact it isn't due to come into effect until next year.
What's more, the increase in demand and supply in recent months is consistent with the improving trend that is visible in the headline price balance - the first positive outturn in the series since June 2010. Forward looking indicators for sales and prices recorded positive readings at three and twelve months. The net balance for price expectations over 12 months increased from 26 to 34. Results are now in positive territory in all parts of the country, excluding Northern Ireland. Surveyors claim that on average, prices will rise by one per cent over the next year. This is up from just 0.1 per cent in December.
While many may be celebrating the positive turn Help to Buy is having, there are some that aren't convinced. Experts at Fathom Consulting explained in their 'Can Help-to-Buy re-ignite the UK housing market bubble?' report that the scheme could in fact increase the price of the average home to GBP 300,000 because of the cost of inflation. They maintain that by 2015, prices could rise by a massive 30 per cent, creating an unwelcome bubble for the UK. Currently, values remain contained because so few people can afford to get on the housing ladder.
- Wednesday 15 May 2013