Help to Buy 'boosts house prices' It has helped steadily push down mortgage rates - with the side-effect of lower savings rates - since last summer. The Help to Buy scheme, announced in the Budget in March, began on April 1. It aims to provides loans for those struggling to find a deposit, with the Government lending 20 per cent of a newbuild property price, interest-free for five years, for those who have only a 5 per cent deposit. Mortgage guarantees will also be on offer from next year, extending beyond newbuild properties, but details have not yet been announced. Peter Bolton King, RICS global residential director, said: "It is encouraging to see that government initiatives are having an impact on the property market. Help to Buy in combination with the Funding for Lending scheme appears to be giving the market a shot in the arm. Thankfully, sales are expected to pick up over the coming months, albeit from historically low levels. However, there are some understandable concerns that the measures will also lead to higher prices. In view of this, it is critical that developers are as good as their word and speed up the delivery of new stock. On average, surveyors predicted prices to rise by just over 1 per cent over the next 12 months, compared with expectations of just 0.1 per cent in December. The highest forecasts for increases were in London. Newly agreed sales were also up, with 19 per cent reporting that they rose rather than fell, up from 11 per cent in March. Chartered surveyors saw around 17 homes sold on average over the three months to April, maintaining a three-year high from March. House price rises were reported most strongly in London, where 28 per cent more said they were on the way up, with a figure of 11 per cent in the South East. But there was a stark disparity with other regions. A fall in prices was reported by 22 per cent more surveyors in the North East, 16 per cent in Scotland and 20 per cent in the West Midlands. However, new inquiries were up across the country except in East Anglia, where on a balance of 2 per cent they were mostly reported down. The most promising picture for new enquiries was in Wales, with a positive of 52 per cent. In Northern Ireland, where figures are compiled separately, 83 per cent more surveyors reported demand up. But the data for house prices was disappointing, with 33 per cent more reporting falls - after an improvement last month for the first time since July 2007. However, the figures have not been seasonally adjusted as elsewhere in the country. Views from economists Matthew Pointon, property economist at the well regarded forecaster Capital Economics, said: "The extension to the Funding for Lending Scheme and Help-to-Buy should lead to a further modest increase in housing market activity. But significant headwinds will prevent a rapid recovery. The continued efforts of many of the large banks to improve their capital positions will limit the boost to mortgage lending. Indeed, the RICS survey now includes monthly data on the rental market, and this showed that tenant demand is continuing to rise as first-time buyers remain locked out of the owner-occupation sector. House prices are also likely to do no better than stagnate. Admittedly, the strength of new buyer enquiries compared to new instructions would normally lead to upwards pressure on prices. But a weakening labour market, with unemployment starting to rise and earnings growth continuing to slow, will limit the extent to which sellers can force through higher prices. Although these schemes will help keep house prices elevated, it is hard to see how stretched households will be able to absorb a rise in prices. Howard Archer, economist at forecaster IHS Global Insight, said: "While a moderate rise in house prices over 2013 looks increasingly probable, a strong upward move still seems unlikely given an ongoing challenging and uncertain economic environment, despite the recent signs of moderate improvement. In particular, very low earnings growth and still relatively low and fragile consumer confidence argues against a marked rise in house prices for some time to come. Some of the government initiatives (primarily the 'Help to Buy' mortgage guarantee scheme) announced in the Budget to lift mortgage lending and boost housing activity will not take effect until 2014, when a firmer recovery in the housing market seems probable, assuming that the economy is improving gradually. Indeed, there is concern that the 'Help to Buy' scheme could eventually fuel a housing price bubble, but we suspect that is unlikely given extended muted looking growth prospects. However, it is something that policymakers will need to keep a close eye on.