While not a roaring success, over 361,000 properties were bought under the Help to Buy scheme, giving hundreds of thousands of people a leg up onto the property ladder.
However, while well-intentioned, the scheme had the unintended consequence of artificially inflating portions of the housing market, with developers hiking up prices for their Help to Buy-eligible homes.Â
The end of the Help to Buy scheme could not have come at a worse time for first-time buyers, with rising mortgage rates, inflated house prices and the cost-of-living crunch pricing many wannabe homeowners out of the property market.
“The likelihood of higher interest rates to combat soaring inflation means things are set to get tougher from an affordability perspective – with fast-rising rents offering no respite.
However, rapidly climbing mortgage rates forcing home shoppers to back off a bit could be the undoing of the surge in property values.
It could allow inventory levels to rise and, in turn, result in a transition to a market with lower levels of home price growth.
As Help to Buy disappears from view, we may see a replacement scheme take its place in the coming months to ease the plight of first-time buyers.
The Government is busying itself to devising a formula to stimulate economic growth ahead of the Autumn Budget – and a robust housing market is a key ingredient to this end.
Myron Jobson is senior personal finance analyst at interactive investor
