Help to Buy will expose more people to negative equity George Osborne has hailed as a "dramatic" move the creation of a new scheme called Help to Buy. This will mean that anyone, not just first-time buyers, looking to buy a newly built property worth less than £600,000 can access a government loan worth up to 20pc of the value of the house, as long as they can put up at least a 5pc deposit. For individuals and families looking to buy, this scheme will make it easier. However, it continues a strategy based on propping up - indeed, inflating - prices rather than getting additional homes built. This suggests that the lessons from the housing bubble that contributed to the financial crisis have not been learnt and that orthodox thinking on housing policy remains entrenched in Whitehall. The main question mark hanging over the Chancellor's announcement is what effect it will actually have on house building. Data published last month showed that NewBuy, the existing, more limited version of Help to Buy, led to just 1,522 housing completions in the first nine months it was in operation. Overall, housing starts in 2012 were below 100,000, down by 11pc on the years before and 45pc below their 2007 peak. This compares with most estimates suggesting that we need to build an extra 250,000 new homes a year to meet rising demand. It is not clear that Help to Buy will generate additional new housing starts, beyond what would have been undertaken anyway (which will certainly not be the case for mortgage subsidies that are not linked to new build). More broadly, this policy does not affect the fundamentals of the housing market. With constrained supply, pent-up demand simply leads to higher prices. Extraordinarily, data released by the Office for National Statistics shows that house prices are now almost back to their pre-crash levels in 2008, despite stagnation in the wider economy. Prices in London have shot up by 5.5pc in the last year alone. In other words, the housing bubble remains inflated, and subsidising mortgages based on the presumption of rising prices simply props it up further. The reason first-time buyers and second steppers are struggling to afford housing is that prices are so high because rates of new building are so low. Mr Osborne's announcement simply perpetuates the cycle, rather than breaking it. Rather than further pumping up house prices and exposing more people to the possibility of negative equity if prices do, in time, fall, politicians need to set out bolder steps that would really get Britain building. Nick Pearce is director of the Institute of Public Policy Reserarch, a think tank