Government housing schemes 'increasing prices not supply'

Over two-thirds of government spending on house buying incentive programmes actually increases demand and house prices, rather than increasing supply.

According to research by housing charity Shelter, £28.7bn of the government funding set aside for the current parliament was being directed to house-buying incentive programmes such as Help to Buy and the Lifetime ISA, which have actually been criticised for increasing demand and drives up house prices.

The remaining third of housing scheme funding, £16.05bn, is spent on building homes.

Shelter said the government schemes which actually boost housing supply are the affordable home programme, shared ownership and starter homes.

The Help to Buy programme was introduced by the coalition government in 2013 to make housebuilding quicker, but it instead increased house prices. Shelter previously said it increased house prices by 3% on average.

Peter Jefferys, a senior policy analyst at Shelter, told the Daily Telegraph that Theresa May’s government has the opportunity to stimulate housebuilding to increase supply, which will also help the economy as well. He maintained that there has to be significant reform of the housebuilding market for this to happen.

The Department for Communities and Local Government said the government had built about 900,000 homes since 2009 and doubled the budget to £8bn for 400,00 extra homes.