If you own a house, good news! If you don't, you may want to go read about kittens for a bit

House prices are set to rise by almost 20% in the next five years.

Savills, the luxury estate agent, has revised upwards its estimates for the growth in house prices over the next five years. The firm now expects UK house prices to average 18.1 per cent growth over the period, up from the 11.5 percent in the original forecasts published in November.

A significant chunk of the increase comes from Savills' changed forecast for this year. The company had predicted a rise of just 0.5 per cent, but now expects prices to grow by 3.5 per cent over 2013 alone. It cites the government's "Help to Buy" policy, which subsidises purchases of newly built homes, for the changes.

Lucian Cook, the director of of Savills residential research, explains:

A combination of low interest rates and stimulus measures means there is capacity for improved price growth over the next three years or so. But it comes at the price of later price growth in 2016/17 when interest rates are expected to start rising. Overall, this means that on an inflation-adjusted basis our revised forecasts indicate that prices will increase by just 2.3% over the next five years.

Help to Buy goes further than any of its predecessors in being aimed at all buyers, not just first time buyers, but we believe its primary impact will be increased transaction levels and that higher than expected price growth is a secondary impact. It needs to be considered against the context that the market remains only partially functioning. While the combined package of Help to Buy measures could add 400,000 transactions over the next three years or so, they would still remain 24 per cent below pre crunch levels.

Cook also dismisses concerns that Help to Buy could provoke a second house price bubble, arguing that the conditions which the scheme imposes prevents that. Moreover, he points out that "rising market activity has been due to increased turnover of existing debt rather than the creation of new debt that defined the late nineties/early noughties market".

That's a bittersweet caveat, however. What it means is that people already on the housing ladder are starting to buy and sell again – but that people who don't currently own a house (or, more specifically, have a mortgage) aren't getting a foot on the first rung.

Despite Help to Buy's name, the policy represents a decreased focus on first-time buyers from its predecessor, FirstBuy. To be eligible for that programme, you had to be a first-time buyer. That ensured it targeted its aid, but also led to it being a failure in the grand scheme of things, spurring the construction of just 6,493 homes as of February this year. Help to Buy, by contrast, is open to anyone buying a new build worth under £600,000.

The purported value to people not on the property ladder of the scheme is indirect. By subsidising purchases of new houses, it ought to incentivise housebuilding, which, in the long run, is what we need to get house prices down to a sensible level. But in the short term, it seems to just be boosting the price of homes which were going to be built anyway. That's good for the developers – and good for the lucky holders of subsidised mortgages – but does little to calm the fear that propertyless people have that they may never get on the ladder.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

GETTY
Show Hide image

Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.