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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 It is now over 6 months old so the content may be out of date.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.

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