Will new government policies resulting from the Budget spell boom or bust for first time buyers?
In theory George Osborneâ€™s â€˜Help to Buyâ€™ ISA should assist thousands of young would-be home buyers in fulfilling their dreams of owning a property.
However, at the same time retirees will now have the option of cashing in their pension pots â€“ and many may choose to invest that money into the buy-to-let market for a better return.
Property experts and economists are questioning the benefit of the chancellorâ€™s boost for aspirational young home owners and older investors. Some critics fear it will distort a housing market already straining under a lack of affordable housing â€“ and could push up house prices.
The â€˜Help to Buyâ€™ scheme will be introduced in the autumn and with inflation rates remaining low, on paper it seems to be good news for those struggling to afford to get onto the housing ladder. The new savings plan is designed to help first time buyers afford a deposit, with the government giving a bonus of Â£50 for every Â£200 saved towards the deposit for a first home up to a maximum of Â£3,000 per person
Many will welcome the new ISA because previously saving for a deposit was the biggest barrier for first time buyers, who are crucial to keeping the housing ladder moving. But, whilst it might be a boost to the majority, it will be less helpful for those living in London where house prices, and therefore deposits, are much higher.
And new homebuyers may well find they are bidding against cash rich retirees aiming to become buy to let landlords following significant changes to pensions which will be introduced in April. The reforms allow those approaching retirement the choice to cash in their pension pot and invest the money elsewhere. Commentators are predicting that many will look at the property market to give them a source of income greater than they currently receive through other investments.
We must address as a matter of urgency this potential increased demand for housing at the cheaper end of the market. If not, I fear that those first time buyers with a deposit vying against cash ready retired investors will be left out in the cold.
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