Date Published 05 April 2013
The Government’s 95% mortgage scheme, due to kick in next January in the second phase of the Help to Buy programme, will send house prices soaring.
The Centre for Economics and Business Research says house prices will overtake their pre-recession peak next year.
The economic consultancy predicts the £130bn lending scheme will add more than £1,000 to the price of a property next year alone, and that by 2018, the average price of a home will be £267,000.
From next January, borrowers with only a 5% deposit will be able to get a mortgage, with the Treasury guaranteeing to the lender 15% of the loan. The scheme will be available on both new and secondhand homes.
CBRE economist Daniel Solomon, author of the report, said: `By 2018, we expect the typical UK home will cost £267,000 – over 20% more than this year.
`We expect the Chancellor’s new Help to Buy scheme will push up house prices before it raises housing supply.`
The CBRE report is the latest warning that Chancellor George Osborne’s scheme, unveiled in last month’s Budget, will create a new house market bubble. Help to Buy has been dubbed a government-backed sub-prime mortgage scheme.