Property website Rightmove has warned that London asking prices have surged £50,000 in the last month. Is Osborne's scheme doing more harm than good?
House price madness?If you're a seller in London, Osborne's scheme is definitely good news, hiking demand and prices. Rightmove says London saw an "unsustainable" +10.2% (+£50,484) jump in new sellers' average asking prices in October.
Prices may also be seeing a fillip from the next phase of Help to Buy, which applies to both new and old properties. This phase is open to all borrowers, not just first-timers. But Osborne's scheme, currently, appears to be generating more noise about surging prices than more house-building, taking pressure off supply hopefully - with the nub of the scheme underwritten by taxpayers.
"To satisfy at least some of the demand," Rightmove says, "London needs an increase in supply from a combination of more new-build properties and more existing owners coming to market. Though the number of sellers in the capital in October is up +15% compared to last, given that September was -12% down on August, the recovery is modest and from a low base."
London a 'special case'The extremes of London property price movements are exacerbated by overseas investor demand swallowing up much of the new-build supply, adding to shortages and more price pressures says Rightmove. In other words, the progress of 'Uncle George's' scheme looks messy.
However David Hollingworth from mortgage broker London & Country told AOL Money the situation is rather more nuanced than it looks.
"The London market is running at its own speed. It's completely ahead of anywhere else. Those rises are not from Help to Buy but the worry is that Help to Buy will help perpetuate that difference. So if you're an aspiring first-time buyer in London, you might view Help to Buy as helpful, accelerating your entry into the market."
He goes on: "Some people can afford a mortgage but not a deposit, especially if they don't have help from family. So this [Help to Buy] could be helpful and bring more liquidity to housing markets elsewhere." Meanwhile other commentators have argued Help to Buy could be switched off in London if the scheme is suspected of powering prices higher.
Postcode lendingBut lending by postcode would be very difficult to administer. Help to Buy, adds Hollingworth, is not an easy scheme to qualify for - lenders are demanding high credit scores. And no wonder. The only way interest rates look likely to move is higher, possibly substantially higher.
And in the rest of the country? A property price bubble seems a long way off in the majority of regions says Rightmove, with two having recorded monthly falls (West Midlands and Wales) recently, "five still negative year-on-year (North, North West, Wales, West Midlands, SouthWest), and seven in ten regions recording annual price increases which lag behind inflation."