The Building Societies Association (BSA) has found that, while 20 per cent of first time buyers think government schemes like Help to Buy would help them get on the property ladder, 23 per cent say the best thing that could be done would be to stop taxing their deposit savings.
The BSA has joined in with the likes of Mervyn King and the IMF in warning against the risk of a state-created housing bubble if the scheme is not managed or exited properly.
Paul Broadhead, head of mortgage policy at the BSA, said:
We are pleased that the Government shares our commitment to get the housing market moving, but it is vital that there is a clearly defined exit strategy right from the start for the Help to Buy mortgage guarantee initiative. It cannot become a permanent feature of the market beyond the time when the country is in economic recovery mode. Care is needed to prevent the actions taken today inadvertently causing a distorted housing market in three years time - a market where state intervention has artificially hiked prices.
There are encouraging noises from builders on sign-up for Help to Buy equity loan. If this and other schemes do encourage builders to build - increasing supply and improving consumer confidence, it will be a success. If the Government were to add some form of savings tax moratorium that would assist consumers by shortening the time they need to raise a deposit.
Separately, the Office for National Statistics found earlier today that UK house prices increased by 2.6 per cent in the 12 months to April 2013. In London, the figure was well above average with an increase of six per cent. Most people expect house prices to go up again over the next year, with just nine per cent of those surveyed forecasting a fall.
An easy way to increase supply and lower house prices would be to ease up on planning laws, particularly on green belt land. The perceived threat to the countryside often used as an argument against this is overblown – just 6.8 per cent of the UK land was classified as urban in 2011 in the UK National Ecosystem Assessment.