While it's hard to find an economist with a good word to say about Help to Buy, the Tories are convinced that the policy is political gold. Three months after the launch of the mortgage guarantee scheme, David Cameron is hailing new figures showing that 750 homes have been bought with state assistance (so much for not 'intervening' in markets) and that 6,000 people, or 100 a day, have made offers on properties.
The Tories are particularly keen to draw attention to figures showing that, contrary to what some predicted, more than 80% of applicants are first-time buyers and three-quarters live outside London and the south east. On average, households are seeking to buy homes worth £160,000, below the average UK house price of £247,000. Cameron says: "The New Year is often a time when people look to make those big life-changing decisions like moving home or taking that first step on the housing ladder. But too many people have found themselves frozen out of the market in recent years as a result of the size of the deposit required.
"That is why as part of our long-term economic plan we introduced the Help to Buy scheme, so hardworking people with sufficient earnings can get on, fulfil their aspirations and enjoy the security of owning their own home. In less than three months, the scheme has already helped thousands of people. I want to see that continue in 2014 and for Help to Buy to help thousands more realise their dream of home ownership."
In an attempt to emulate Margaret Thatcher, who was memorably photographed handing over the keys to those who bought their council homes under Right to Buy, Cameron has asked staff to ensure that he meet couples benefiting from the policy whenever he makes a regional visit (he will be in Southampton today).
For Labour, Help to Buy represents a political challenge. Those who benefit from the scheme will naturally be grateful to the government, while others who do not, or who lose out through price inflation (one of the ill-disguised aims of the policy), may not necessarily blame the coalition. But by warning that only more housebuilding will bring prices under control, and that the government is failing to build enough, Labour can offer a distinctive message. Shadow housing minister Emma Reynolds said in response to Cameron: "Any help for first time buyers struggling to get on the property ladder is to be welcomed. But rising demand for housing must be matched with rising supply if this scheme is to bring the cost of housing within the reach of low and middle income earners.
"Instead under this government housebuilding is at its lowest level since the 1920s. You can't deal with the cost-of-living crisis without building more homes. That's why Labour has committed to building 200,000 homes a year by 2020."
On this point, Labour is at one with economists, who argue in the FT's annual survey that more building is the best way to restrain an incipient housing bubble. Charles Davis of the Centre for Economics and Business Research says: "The simple, crucial fact is that there remains a massive, basic discrepancy between the demand and new supply of homes in the UK. Until that is solved there is likely to be a real appreciation of bricks and mortar, especially while monetary policy is still as loose as it is."
John Llewellyn of Llewellyn Consulting says: "The best way to restrain the housing market is to allow more houses to be built. That implies releasing land; and building better transport infrastructure so that people can commute within their one to one-and-a-half hour travel-time budgets." And Andrew Simms of the New Economics Foundation says: "Increasing the supply of housing will go some way to reducing price inflation and that can be done in a number of ways: properly promote new, low-cost, energy-efficient house building, renovate unfit housing stock and compel many of the estimated 900,000 plus empty homes in the UK to be brought back into the market."
Ministers' response is to point to figures suggesting that greater demand is stimulating greater supply. In the 12 months to September 2013, annual housing starts totalled 117,110, up by 16% compared to the year before (although annual housing completions fell by 8% to just 107,950). But this remains progress from a very low base. Unless the rate of building increases dramatically, Labour will still be able to warn that Help to Buy is not addressing the greatest problems in housing and continue to flesh out its plan to do so.