Help to Buy pushes UK house prices up


Help to Buy pushes UK house prices up

Recent research carried out by housing charity Shelter suggests that the Help to Buy scheme has contributed to a significant rise in average house prices across the UK – pushing the average figure up by £8,250 since it was introduced.   

The scheme, brought in by the government in 2013, helps first-time buyers get onto the property ladder by providing them with a government loan to be used towards a house deposit. This allows some people to buy their own home with a deposit as low as 5%.

A popular scheme

Since it was launched, the scheme has seen a huge uptake. Just short of 120,000 households have taken advantage of Help to Buy – and the figure is still growing. In June of this year alone, nearly 5,000 people used the government scheme to help them purchase their first property.

Help to Buy: a slippery slope

The research suggests that the level of mortgage lending is up by 8.4% because of the scheme, with the average house price shooting up by £8,250 too. Although Help to Buy has helped thousands of first-time-buyers to afford a home that would normally be out of their reach, Shelter suggest it has also directly led to an increase of 3% on the average house price.

Shelter have based their research on a study from the National Housing and Planning Advice Unit, where a relationship between the level of mortgage lending and average house prices was discovered. They found that for every 1% increase in mortgage lending, house prices went up by 0.36%.

Although some areas have seen a huge uptake in Help to Buy schemes, others have barely benefitted at all. Places with lower-priced housing typically witness a higher take up of the scheme. In the north-east of England, nearly 7% of all mortgage transactions were due to the Help to Buy scheme – which is the highest uptake in the country.

North-west Leicestershire and South Tyneside have seen their property prices increase the most because of the scheme - according to Shelter. They estimate that the former of the two regions has seen an average price increase of over £19,000, while South Tyneside has seen a £13,000 increase.

For more information on the Help to Buy schemes available click here >

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