No housing bubble but cuts on the way, says IFS - Economy - News - Moneyfacts


No housing bubble but cuts on the way, says IFS

No housing bubble but cuts on the way, says IFS

Category: Economy

Updated: 06/02/2014
First Published: 06/02/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

There's been a lot of speculation floating around that we're in for another housing bubble, with prices having risen rapidly over the past 12 months. However, the annual IFS Green Budget report, released yesterday, will hopefully dampen those concerns.

It said in the report that there's "no evidence of a housing bubble" as yet, and although prices are escalating quickly they're still 25% below their pre-recession peak. Even London has failed to reach dangerous levels, with prices being 17% lower than they were before the financial crisis.

As for Help to Buy, the IFS (Institute of Fiscal Studies) believes that the policies' support for homebuyers is "well-targeted" but urges the continuing focus on building new homes to increase the volume of houses available for sale, with a decent stock of housing supply being key to ensure prices don't increase even more.

Elsewhere in the report the pensions system was covered, with the IFS urging the Government to reconsider plans to restrict income tax relief for pension contributions, while there are fears that more cuts to public spending could be on the way.

The report stated that the Government still wasn't half way there on implementing its planned spending cuts – by the end of this financial year only 40% of planned cuts will be in place – perhaps leading to even more than had been expected. This is despite the economic outlook being a lot more positive, with the UK economy expected to grow by 2.6% this year and a much more balanced recovery being anticipated.

What next?

Compare the best mortgages for you in our best buy charts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Base rate remains unchanged in surprise decision

Earlier today, the Bank of England’s rate setting committee announced that it had voted decisively to keep base rate on hold at its record low of 0.5%. But what does it mean for you?

Budget 2016 – an overview

Well, George Osborne has just revealed the Budget for 2016 – his eighth so far as Chancellor – and as ever, there were some winners and losers from the whole thing. Below is a quick overview of the key points.

What does a US Fed rise mean for the UK?

The US Federal Reserve has decided to raise interest rates, and although you may not think that financial events happening in the US will have much of an impact on UK soil, you may be surprised…