Help to Buy pushed up house prices in some of England’s least affordable housing markets despite helping hundreds of thousands of people onto the property ladder, a major government-commissioned evaluation has found.
The independent evaluation of the equity loan scheme finds evidence that Help to Buy increased property prices in areas where housing supply was constrained, making homes harder to afford for some prospective first-time buyers.
Researchers estimate the scheme increased prices by around 2% in some areas, while properties bought through Help to Buy attracted an additional premium of around 1% over and above the wider new-build premium.
The findings come from a long-awaited evaluation commissioned by the Ministry of Housing, Communities and Local Government into the scheme, which operated in England between 2013 and 2023.
AFFORDABILITY IMPACT
The researchers find Help to Buy worked differently depending on local housing market conditions.
In more affordable areas, additional demand generated by the scheme was more likely to stimulate extra housebuilding.
But in less affordable and more supply-constrained markets, increased purchasing power was more likely to feed through into higher prices without producing an equivalent increase in housing supply.
Previous analysis of Help to Buy has reached similar conclusions, with the Competition and Markets Authority noting that evaluations generally found the scheme inflated prices in supply-constrained markets such as London without significantly increasing supply.
The latest evaluation also raises questions over how many buyers actually needed government assistance to purchase a home.
Some 46% of customers say they would not have been able to buy without Help to Buy, meaning more than half indicated they could have bought a suitable property without the scheme.
LONDON STRUGGLES
The scheme appears to have been particularly ineffective at increasing home ownership in the capital.
Increasing the maximum Help to Buy equity loan available in London did not result in an increase in first-time buyer mortgage sales, according to the evaluation.
The findings add to longstanding concerns that demand-side interventions can have unintended consequences when housing supply cannot respond sufficiently.
£25BN BENEFIT
Despite the affordability concerns, the evaluation reaches a positive overall conclusion on Help to Buy.
Researchers classify the scheme as delivering “very high” value for money, estimating a net present social value of £25.1bn in 2024/25 prices.
It also estimates around 15% of new homes constructed in England during the decade in which Help to Buy operated were attributable to the scheme.
The mixed findings suggest the impact of Help to Buy depended heavily on local housing supply – stimulating additional development in some markets while contributing to higher prices in others.
The evaluation also cautions against assuming a similar scheme would have the same effect today, given changes to interest rates, inflation and the availability of high loan-to-value mortgages.
