By . Tim Shipman . PUBLISHED: . 07:18 EST, 26 March 2013 . | . UPDATED: . 06:46 EST, 27 March 2013 . Chancellor George Osborne was forced to defend his mortgage scheme from claims it would push up house prices and help people buy second homes . Government plans to kick-start mortgage lending in a bid to boost growth will simply drive up house prices, the Treasury watchdog warned yesterday. Claims that the scheme to help first-time buyers and those trading up will lead to an increase in house building were dismissed by the Office for Budget Responsibility. Director Robert Chote said it will simply raise prices while planning restrictions hold back house building. ‘I suspect that more of it would have showed up in prices than in quantities,’ he said. Chancellor George Osborne also faced claims from MPs on the Treasury Select Committee that his Help To Buy plans will simply fuel another house price bubble. Labour’s Andy Love accused Mr Osborne of deliberately seeking to boost the property market so people feel better off but warned that would simply price more people out of the market. In last week’s Budget, Mr Osborne outlined plans to help those who cannot afford to put down a 20 per cent deposit on a property. From January, buyers will have to find 5 per cent with the government underwriting the other 15 per cent with a repayment when the home is sold. A separate scheme will see the government share equity with home buyers in new build properties. The OBR’s Steve Nickell also gave a lukewarm welcome to the Help to Buy scheme. On the up: House prices have rise in almost all regions since the 2008 crash, most sharply in London and the South East . Chancellor George Osborne last week promoted his house buying package on a visit to a development in Woolwich, south east London . ‘The key issue is, is it just going . to drive up house prices?’ he told the Committee. ‘By and large in the . short run, the answer to that is yes. ‘In the medium term, will the . increased house prices stimulate more house building? And our general . answer to that would probably be a bit, but the historical evidence . would suggest not very much. ‘Prices will go up and one would hope that that would impact on house builders, but probably not very much.’ But Tory Andrew Tyrie, the committee . chairman, warned that he risked ‘ploughing money back into the boom-bust . property cycle’ while the supply of housing will only ‘increase later, . if at all’. John Cridland, director general of . the CBI, Britain’s biggest lobby group, has also raised his fears that . the Help To Buy scheme could trigger fresh ‘dangers’ of a house price . ‘bubble.’ Quizzed by the MPs, Chancellor repeatedly refused to say whether he thinks house prices will rise. OBR chairman Robert Chote said there was little scope in the planning system to build more homes so the mortgage scheme was likely to force up house prices . ‘I don’t detect that we’re in the middle of a housing boom,’ he said. ‘I think we’re in a very difficult . situation, where the mortgage market is impaired, where very high . deposits are being demanded of people, and families are being priced out . of the housing market. That is neither economically right nor socially . fair.’ Quizzed by the MPs, the Chancellor repeatedly refused to say whether he thinks house prices will rise. He told the Treasury Committee that it . is not his ‘intention’ to help those purchasing a second home but again . refused to rule out that possibility. Example: The proposed scheme is split into two separate streams, the first (above) for buyers purchasing new build homes and the second (below) for everyone else . But he added: ‘The absolutely clear . intention of the scheme is to help people buy their first home or move . home as their family grows.’ He also used his appearance at the . Committee to denounce his Conservative critics who have demanded radical . measures to slash tax or spending further. He told the MPs: ‘You get the argument . from some Right-wing economists that what the economy needs is shock . therapy. I would argue the British . economy has had quite enough shock therapy in the last three or four years.’ Example: The proposed scheme is split into two separate streams, the first (above) for buyers purchasing new build homes and the second for everyone else .
Office for Budget Responsibility says Chancellor's flagship Budget plan will do little to boost building but flood the market with buyers .
George Osborne insists scheme will provide incentive to builders .
Labour's Andy Love accused warned move could price people out of market .
By . Tim Shipman . PUBLISHED: . 07:18 EST, 26 March 2013 . | . UPDATED: . 06:46 EST, 27 March 2013 . Chancellor George Osborne was forced to defend his mortgage scheme from claims it would push up house prices and help people buy second homes . Government plans to kick-start mortgage lending in a bid to boost growth will simply drive up house prices, the Treasury watchdog warned yesterday. Claims that the scheme to help first-time buyers and those trading up will lead to an increase in house building were dismissed by the Office for Budget Responsibility. Director Robert Chote said it will simply raise prices while planning restrictions hold back house building. ‘I suspect that more of it would have showed up in prices than in quantities,’ he said. Chancellor George Osborne also faced claims from MPs on the Treasury Select Committee that his Help To Buy plans will simply fuel another house price bubble. Labour’s Andy Love accused Mr Osborne of deliberately seeking to boost the property market so people feel better off but warned that would simply price more people out of the market. In last week’s Budget, Mr Osborne outlined plans to help those who cannot afford to put down a 20 per cent deposit on a property. From January, buyers will have to find 5 per cent with the government underwriting the other 15 per cent with a repayment when the home is sold. A separate scheme will see the government share equity with home buyers in new build properties. The OBR’s Steve Nickell also gave a lukewarm welcome to the Help to Buy scheme. On the up: House prices have rise in almost all regions since the 2008 crash, most sharply in London and the South East . Chancellor George Osborne last week promoted his house buying package on a visit to a development in Woolwich, south east London . ‘The key issue is, is it just going . to drive up house prices?’ he told the Committee. ‘By and large in the . short run, the answer to that is yes. ‘In the medium term, will the . increased house prices stimulate more house building? And our general . answer to that would probably be a bit, but the historical evidence . would suggest not very much. ‘Prices will go up and one would hope that that would impact on house builders, but probably not very much.’ But Tory Andrew Tyrie, the committee . chairman, warned that he risked ‘ploughing money back into the boom-bust . property cycle’ while the supply of housing will only ‘increase later, . if at all’. John Cridland, director general of . the CBI, Britain’s biggest lobby group, has also raised his fears that . the Help To Buy scheme could trigger fresh ‘dangers’ of a house price . ‘bubble.’ Quizzed by the MPs, Chancellor repeatedly refused to say whether he thinks house prices will rise. OBR chairman Robert Chote said there was little scope in the planning system to build more homes so the mortgage scheme was likely to force up house prices . ‘I don’t detect that we’re in the middle of a housing boom,’ he said. ‘I think we’re in a very difficult . situation, where the mortgage market is impaired, where very high . deposits are being demanded of people, and families are being priced out . of the housing market. That is neither economically right nor socially . fair.’ Quizzed by the MPs, the Chancellor repeatedly refused to say whether he thinks house prices will rise. He told the Treasury Committee that it . is not his ‘intention’ to help those purchasing a second home but again . refused to rule out that possibility. Example: The proposed scheme is split into two separate streams, the first (above) for buyers purchasing new build homes and the second (below) for everyone else . But he added: ‘The absolutely clear . intention of the scheme is to help people buy their first home or move . home as their family grows.’ He also used his appearance at the . Committee to denounce his Conservative critics who have demanded radical . measures to slash tax or spending further. He told the MPs: ‘You get the argument . from some Right-wing economists that what the economy needs is shock . therapy. I would argue the British . economy has had quite enough shock therapy in the last three or four years.’ Example: The proposed scheme is split into two separate streams, the first (above) for buyers purchasing new build homes and the second for everyone else .
by the Office for Budget Responsibility. Director price bubble. Labour’s Andy Love accused Mr Osborne of deliberately seeking to boost the warned that would simply price more people out of the market. In last week’s Budget, Mr Osborne separate scheme will see the government share the South East . Chancellor George Osborne last