House prices rise with Help to Buy boost

DEMAND for housing has been pumped to a three-year high by early interest in Help to Buy, according to the Royal Institution of Chartered Surveyors (RICS).

RICS’ latest survey of property professionals showed increased sales and new buyer inquiries in April, along with rising house prices nationally for the first time since June 2010.

Peter Bolton King, global residential director of RICS, said: “Help to Buy in combination with the funding for lending scheme appears to be giving the market a shot in the arm”.

Help to Buy was introduced by chancellor George Osborne in this year’s budget, and does not begin issuing mortgage guarantees until 2014. However, the surveyors’ organisation credited the announcement of scheme with renewed interest and increased confidence in continued price rises.

The supply of houses for sale also rose marginally in April, but was outpaced by rising demand, contributing to the rise in prices.

Unlike previous surveys, professionals were seen to be optimistic about future prices in every part of the UK except Northern Ireland. Though price rises and expectations for the future were significantly weaker in many parts of the UK, this was narrowly outweighed by strong performance in London and the south east .

Strong growth in the capital has also been seen in other studies. Hometrack’s latest figures show 93.7 per cent of sales in London achieve their asking price, a rate not seen since the boom years leading up to the financial crisis.

Concerns over the potential effects of the Help to Buy scheme were recently voiced by Fathom Consulting, which warned that loose mortgage conditions could lead to a renewal of the housing bubble and price inflation as high as 20 per cent by 2015.