"It is the wrong policy at the wrong time. Effectively what the policy is designed to do is encourage households to load up on debt. Surely a sustainable growth path can be achieved if households are not burdened."
- Peter Dixon, global equities economist at Commerzbank AG
The economy is one the right track and government measures are supporting economic growth. However, more and more analysts are considering the recently-launched Help to Buy scheme is a wrong policy for the country and can lead to a growing housing bubble. According to the latest survey, two thirds of economists do not see the scheme helping the economy. Earlier this month Prime Minister David Cameron launched his controversial scheme to aid home buyers, and while property market is recovering from very low levels of activity, and house-prices are outpacing inflation and incomes, speculation about how much support is needed are heating up. Mortgage hit 68,212 last month, the highest level since 2008, while the total number of borrowers with deposits equal of below 15% amounted to 8,200, almost 60% higher than a year ago.
Also Friday, Acadametrics and LSL Property Services Plc said house prices rocketed to a record high last month. Values climbed 0.5% to an average of 235,534, with London leading the property-market recovery. The report also showed price gains were recorded in nine of ten regions over the last three month. House prices in the capital are growing at a faster pace than inflation and more than double house price growth in other regions in England and Wales. While housing market is showing a sustained recovery, many analysts are calling it divergent and two-speed market, and a possible blow of a property bubble may have a devastating effect on the economy.
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