Even before the effects of the second part of George Osborne's Help To Buy scheme have been felt, house prices have already reached a record high. The ONS's index today shows that the average price of a UK property now stands at £247,000, the highest level on record. Wages, by contrast, are not expected to rise in real-terms until 2015 and will not regain their lost value until 2023. In these circumstances, launching Help To Buy is the economic equivalent of throwing fuel onto the fire. With the cap for support set at £600,000, the scheme will act as a giant state subsidy for homeowners seeking to trade up or to borrow against the value of their property.
That, of course, is entirely the point. As Osborne reportedly told the cabinet recently, "Hopefully we will get a little housing boom and everyone will be happy as property values go up." But while Help To Buy is certainly bad economics, it's not even clear that it's good politics. A new poll by YouGov for Shelter found that 66% of the public don't want house prices to rise, up from 58% in June. Even more strikingly, more outright homeowners want prices to fall or stay the same than to rise (67-28%), along with most Conservative voters (65%) and most Daily Mail readers (66%). Quite rightly, the experience of the crash and the lack of affordable housing for young people has persuaded the public that inflating another housing bubble isn't a great idea.
If anything might persuade Osborne, the Tories' strategic grandmaster, to think again, it is surely the prospect of losing, rather than winning voters over this issue.