Here’s why government spending isn’t fixing the housing crisis, according to Shelter
The government is pouring money into schemes that boost demand for properties – but is failing to put enough cash into house building, according to research from housing charity Shelter.
The current parliament has spent two thirds of its housing money – £28.7bn – on programmes such as the Lifetime ISA and Help to Buy, which increase demand, Shelter said, without investing enough in building homes to meet that demand.
Just 35 per cent (£16.05bn) of the government's financial support for the private housing market goes to helping create new homes.
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The government's Help to Buy scheme helps first-time buyers get on the housing ladder with a five per cent deposit and has helped housebuilders like Persimmon shift their stock. Nearly half of Persimmon's homes are sold through Help to Buy mortgages – and its share price has steadily climbed since the first phase of the scheme began in April 2013.
However, Shelter said by helping people purchase a home without increasing the supply glut, the scheme has actually pushed up house prices.
Pete Jefferys, senior policy officer for Shelter, said: "Rather than repeat the mistakes of the past and prop up a market which hasn't delivered, this government has the chance to face things head on and put in place measure that will not only stimulate housebuilding, but boost the economy as well.
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"We're confident that the new government could achieve their targets and give hope back to the millions struggling day-in day-out with sky-high housing costs, but there has to be significant reform of the house-building market to focus on actually building the homes we need to make this happen."
Help to Buy has come under scrutiny recently after it emerged it cannot be used until buyers complete a purchase – rather than being able to use the money towards paying a deposit.
The outlook for house prices in the coming months is cloudy, according to Nationwide. House prices picked up again in June, after a lull immediately following the Brexit vote and changes to stamp duty rules.
Nationwide's chief economist Robert Gardner said the level of stock on the market is at a 30-year low, so even though first-time buyers no longer face such fierce competition from landlords, there are fewer properties to chose from.