Property values set to rise thanks to Help-To-Buy
London house prices are set to rise further as a result of the Government's Help-To-Buy scheme, according to forecasts from Cluttons.
The property consultant suggests the value of property in greater London is set to grow by 6.9 per cent this year and at a rate of 3.2 per cent over the next five years, as the scheme is extended to all home buyers from next year bringing more financed homeowners into contention.
Sue Foxley, head of research at Cluttons said: "Improved consumer confidence, an easing in mortgage credit and the raft of government policy intervention measures to bolster new buyer demand will drive further capital growth.
"The prospect of rising base rates over the medium term proffers a further concern with the ratio of residential values to gross earnings already over seven in London.
"With few signs of a dramatic increase in supply that would have the potential to change the balance of this equation, the rental market will inevitably move up the agenda for London's households and policy makers."
The consequence of the price hike will push ownership in and around London out of reach of yet more households."
Even in London where earnings tend to grow slightly faster than elsewhere, it is unlikely average income will keep pace with house price growth over the next two years.
Credit ratings agency Fitch has also warned Help-To-Buy could artificially push up house prices without increasing the number of homes built.
The upturn in prices has caused a return of bidding wars in the capital which has lowered the capacity of first time buyers to enter the market.