House Prices Are On The Rise, But Is This Good News For Everyone?
The UK housing market finally seems to be picking up after its standstill following the banking crisis; however market analysts fear another property bubble is developing and when it bursts it could mean another recession for the UK.
The National Office for Statistics’ June House Price Index (HPI) has been hailed as a sign that the economy is finally recovering; the Government’s Help to Buy scheme has helped to speed up the economic recovery with a reported 10,000 applicants in 4 months and the UK has seen a rise in house prices as a result. The first phase of the scheme only applies to new-build properties and has helped to boost the supply of properties that has been severely lacking. There are major concerns from market analysts that when the second phase of the Help to Buy scheme rolls out next year it will increase the demand for property, without increasing the supply to match it, and cause house prices to increase further. Britain could then end up in another property bubble, which would set the economy back when it inevitably bursts.
Rising house prices are seen as a sign of economic recovery and it does seem like it should be good news, but it means that first-time buyers will continue to struggle to get onto the property ladder, as even with the Help to Buy scheme they need to raise 5 per cent of the property value as a deposit themselves. It is likely that those already on the property ladder will benefit most from the new phase of the Help to Buy Scheme; those who already have some equity behind them will be able to up-size and move up the property ladder, but as long as first-time buyers are priced out of the market then the property market will not gain any long-term stability without on-going help from the government.