House building firms given boost by Chancellorís Help to Buy extension

Shares in the UKís biggest house building firms have soared hugely, following an announcement made by Chancellor George Osborne about his decision to carry the first phase of the Help to Buy Scheme right the way through to 2020.
Persimmon were the greatest beneficiaries of Mr Osborneís remarks, rising at one point by over 6% on the FTSE 100, though Bovis Homes and Taylor Wimpey both experienced similar trajectoryís, rising by 4.4% and 3.4% respectively. 
The first phase of the governmentís flagship Help to Buy scheme, entitled the Equity Loan Scheme, was implemented in April last year and was initially scheduled to run until 2016.
The scheme was intended to encourage more aspiring homeowners to build their property from scratch, and enables buyers to borrow up to 20% of a new build home, interest free for 5 years. They are then only required to pay a 5% deposit in to obtain the house though they still need to find a secured loan distributor to cover the other 75% of the property costs. 
However, the Chancellor has now outlined that the scheme will continue for an added four years, taking its new completion data to 2020. Mr Osborne identified that it was a necessary measure to ensuring that house building levels begin to catch up with demand, so that prices begin to stabilise in the rapidly heating up property market. 
Critics have hit out at the Chancellorís decision, brandishing it ill thought out and counter-productive as they have forecasted that it will push house prices up even more in the future. 
No changes in the completion date of the second phase of the Help to Buy scheme have been announced, with the government likely intentionally avoiding any extension of the Mortgage Guarantee scheme, to lower the chance of the market ëoverheatingí in the future. 
Counter-productive?
Alongside his confirmation of the Equity Loan schemes extension, the Chancellor also identified that he would be allocating a further £6 billion into the English version of the scheme, in a move that he expects will result in 120,000 new properties being constructed.   
However, whilst the Chancellorís announcement has been heralded by the Home Builders Federation, criticism of the scheme has remained rife, with many citing that its extension will place an even further strain on property prices across 
the UK.
Andrew Sentance, an ex member of the Monetary Policy Committee, reiterated this sentiment, warning that property 
prices could spiral out of hand if measures were now implemented to push demand down. 
“We’re on the threshold – if some of this support for the housing market is not reined in – of a housing bubble,” he told the BBC.
And he warned that the purpose of the scheme, to help first-time buyers, could prove self-defeating.

“The combined impact of low interest rates and these schemes is pushing up house prices, and taking them out of the reach of first-time buyers,” he said.

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