Help-to-Buy fuels fear of house price bubble

The Royal Institution of Chartered Surveyors (Rics) said urgent action must be taken to tackle the problem of demand outstripping the supply of homes for sale, which is “nowhere near” the levels needed to cope.

Sales volumes are running at their highest levels in more than five years as more people flood into the market to snap up properties, its latest UK survey found.

Rics said that nearly three-fifths (57 per cent) of surveyors reported price rises during October, the highest percentage since June 2002, reflecting the imbalance between supply and demand.

Simon Rubinsohn, Rics chief economist, said: “A greater willingness by lenders to increase loan to values on mortgage products allied to the Help to Buy scheme has meant that more and more first-time buyers are in a position to enter the market.

“In spite of this, the amount of homes currently up for sale is still nowhere near enough to keep up with demand.”

Under the latest phase of Help to Buy, rushed forward by three months as part of a Conservative response to the rising cost of living, people can buy properties worth up to £600,000 with a deposit of only five per cent.

David Cameron insisted Help to Buy will help boost social mobility by opening up home ownership to those without wealthy parents. New figures show average-income first-time buyers make up the bulk of 2,000-plus who have taken up the scheme in its first month.

The Prime Minister said: “This is about social mobility. The fact is that without Help to Buy we were beginning to see a country where only people who had wealthy mums and dads who could give them the money for their deposit were able to buy a flat or a house.”