“A 1% annual increase in the average house price to £162,606 is relatively modest, but the real question following last week’s Budget announcements is whether we’ll be saying the same next year?
“There was already a consensus among intermediary lenders at the turn of the year that the average price may pass £164,000 by the summer. With Help to Buy’s equity loan scheme starting next week, and the mortgage guarantee programme on the horizon, the ingredients are certainly there to push house prices higher still.
“This is why it is so important for Help to Buy to kickstart house-building activity. As lenders, helping borrowers to access higher loan-to-value deals will be of limited use if they find themselves faced with a situation where house prices – and therefore deposits – are inflated artificially.
“Like the Funding for Lending Scheme, Help to Buy is a policy with a limited lifespan, whereas the need to increase the supply of property in the market is a long-term challenge that will become more pressing as time passes.”