Help to Buy causing bubble
The Royal Institution of Chartered Surveyors
(RICS) has warned;
The Royal Institution of Chartered Surveyors (RICS) has warned that a damaging property bubble is being made more likely by the Government’s Help to Buy (H2B) scheme. A report from RICS states that 57% more members were registering higher sales prices than were seeing a fall, the biggest “net balance” since 2002. RICS added that in the three months to October, chartered surveyors acted in the sale of an average of 20 homes, the highest number since 2008. While transaction levels rose in almost every region – not only in London and the South East. Economists at the trade body said inflationary pressure was being driven by a lack of property coming on to the market just as government and Bank of England initiatives were making it easier to buy. RICS said the Bank of England’s Funding for Lending scheme had cut mortgage rates, while the latest phase of H2B meant that more people could find a place on the ladder. Labour and some Liberal Democrats have expressed fears that H2B will inflate another bubble. Chris Leslie, the shadow Chief Secretary to the Treasury, has called on the Bank of England to launch an immediate review of the scheme rather than waiting until next year, and said the £600,000 limit for properties being bought should be cut. Elsewhere, the Independent’s Steve Richards compares H2B to the sub-prime mortgage crisis. He says the scheme will contribute to the private property boom without addressing the basic problem, which is a lack of supply.