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Treasury Policy To Account For A Third Of House Price Growth Over Next Two Years

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http://www.telegraph.co.uk/finance/personalfinance/houseprices/10307363/Treasury-policy-to-account-for-a-third-of-house-price-growth-over-next-two-years.html

Government policies to kick start Britain's property market will account for a third of a near £15,000 rise in average house prices over the next two years, experts claimed.

Economists said the average house prices were likely to rise by more than 9pc between now and the General Election in 2015 as the economy splutters back into life.

This would take the average house price up by almost £15,000 to £179,000.

And almost a third of the growth will be fuelled by the Treasury's Help to Buy cheap credit initiative launched by Chancellor George Osborne to drive demand from nervous house buyers. The scheme will provide state guarantees for riskier mortgages next year.

Yolande Barnes, director of residential research at Savills, said: "We're forecasting prices to go up by 4.5pc next year and 5pc in 2015, and Help to Buy could account for about a third of that. Whether it's a good thing or not depends on whether you own a home or you're trying to buy one."

She insisted the chronic shortage of new homes being built across Britain was a far bigger inflationary pressure.

Quick buy before prices go up again... Although it would appear may help boost house prices or at least keep them propped up so people still get to feel they are wealthy property owners.

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If that is the case

Then I think it should be made plain to the purchaser how much this help to buy will cost them over the lifetime of the mortgage, some sort of health warning:

"By accepting our help you agree that you will pay £XX,XXX more interest than you would do so otherwise"

Edited by LiveinHope

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The next two questions any buyer should be asking is :

- who is trying to pump this market up so they can sell up?

the banks, they need the funds

- what will happen to prices when government policy changes?

Nothing until the banks can sustain the losses, then prices will collapse.

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Given that the UK govt plans to a spend ~£250bn in excess of its income in the next two years it's not unreasonable to suggest that Treasury policy will be responsible for 100% of house price growth over the period.

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