OECD: 'scrap Help to Buy or the housing market will blow'

Remember Help to Buy, designed to allow those with smaller deposits to buy homes? Well, the OECD wants the government to stop that. Like, now.

by Emma Haslett
Last Updated: 19 May 2014

I’m going to let you in on one of my fondest memories: shortly after he pronounced Help to Buy open, I was sent to trudge round after George Osborne on a dusty building site just outside Derby. It was cold, it was windy, everyone was in silly hard hats, and journalists there were only allowed one question. No one was in a good mood.

After much careful thought, I settled on the following: ‘shouldn’t you be doing something about prices, rather than just making people borrow more?’. Osborne’s response was something muttered, to the effect that ‘when demand goes up, housebuilders will build more homes, so prices will drop’. Fast forward 12 months, and that doesn’t seem to have happened.

Now the Organisation for Economic Co-operation and Development has warned Osborne that unless the government does something to curb mortgage lending, house prices are going to spiral out of control.

The Paris-based think tank reckons that unless the government does something to ‘restrain housing demand’ – like cutting back on aforementioned Help to Buy scheme or making it harder to get mortgages, house prices are going to keep rising.

Some have pointed out that the perceived ‘bubble’ is pretty much only in London – although Nationwide reckons prices have risen 10.9% across the entire country. To be fair, they were starting from a much lower base. So even deepest, darkest Yorkshire could, in the not too distant future, experience the dizzying ride Londoners have felt over the past few months. Hold tight…

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