The Government’s plans to encourage 10,000 first-time buyers onto the housing ladder announced in the budget have been branded ill-advised and dangerous by leading think thank the Social Market Foundation (SMF) today (23 March).
The plans, which will cost the Government £250m, will give first time buyers on low incomes access to government funds to help them onto the housing ladder. But the Social Market Foundation warned against encouraging first-time buyers to invest in an ailing housing market.
“House prices are looking precarious and leading indicators imply big falls are around the corner,” said SMF Director Ian Mulheirn.
“House prices are running at historically high multiples of average earnings. Combined with imminent interest rate rises and deep public sector cuts which will start to bite from April, further house price falls look inevitable”,
“Now is not the time to be encouraging vulnerable people to invest in a market that is heading downhill fast. This plan is a leg up – but it’s a leg up to the noose of negative equity and is ill advised and dangerous”.
The SMF said that Government’s measures to ease planning regulations, also announced in today’s budget statement, are a better way to help first time buyers.
Ian Mulheirn said: “The Government has made welcome changes on planning, making it easier to build houses and removing red tape. This is a far more effective way help first time buyers without plunging them into negative equity.”