Cameron may rethink help to buy as UK house prices soar 8%
Published by Max Salsbury for 24dash.com in Housing and also in Central Government, Finance
House price rises ease in run-up to election
UK house prices soared by 8% in the year to the end of March, the Office of National Statistics' latest data has revealed.
And Prime Minister David Cameron has conceded that the government may look at making changes to its help to buy policy in the wake of comments from the governor of the Bank of England that the housing market represents a threat to the UK's economic recovery.
The ONS' figures show that house prices in London rocketed by 17% between March 2013 - March 2014.
However, with the capital and the South East taken out of the equation, property costs across the rest of the country rose by a more moderate 4.7%.
Speaking on the BBC's Today programme this morning, the prime minister said: "Of course, we will consider any changes that are proposed by [Bank of England governor] Mark Carney.
"But, as he said, this is a well-targeted scheme and it has helped tens of thousands of people get on the housing ladder and to have mortgages."
Responding to the ONS' figures and Cameron’s comments, Alex Hilton, director of private rented sector campaign group Generation Rent, said: “There’s no let-up for first time buyers, who are facing double digit inflation and stagnant wages.
"Housebuilding might be up in Cameron’s neck of the woods, but the country’s nine million private renters need the government to commit to 300,000 new homes before they will start to pay less for their homes.
“Rampant house price inflation is not a sign of health but of sickness, and Mark Carney recognises this. Homes are so expensive in London and other parts of the country that employers now struggle to recruit people who can afford to live near their workplace.
"If companies start moving jobs out of London, the economy will stall and the housing crisis will start hitting the haves as well as the have nots.”
Nicholas Ayre, managing director of buying agency Home Fusion, said: "The housing market is not storming ahead quite as much as before because sentiment is changing. Estate agents are telling me that buyers are increasingly unwilling to pay the mad prices that vendors are asking. Whether it's down to affordability or buyers taking heed of concerns about a bubble, they are less willing to risk their money and pay over the odds.
"Vendors will need to be realistic about pricing if they want to secure a sale. This may take a couple of months or so but it will happen as savvy buyers are saying 'enough is enough'.
"Despite the weekend talk from Mark Carney and Nick Clegg, the housing market is showing signs of correcting itself, without the need for external intervention."
Housing Minister Kris Hopkins said: “The government is committed to making homeownership a reality for as many people as possible.
“While real house prices remain around 15% below their pre-crisis peak, affordability is still an issue for many families around the UK.
“Help to buy is ensuring more aspiring homeowners can get the help they need to get on the housing ladder, while accounting for less than 3% of total transactions.
“Help to buy equity loan has helped more than 30,000 people to buy or reserve a new build home with 88% of sales going to first-time buyers at an average price of £185,000.
“In addition our work to cut the record deficit we inherited has helped keep interest rates low and homeownership at its most affordable for six years.”