Labour has hit out at the government over its record on housebuilding as figures reveal the controversial Help to Buy credit easing scheme has supported almost £1bn worth of mortgages in its first three months alone.
Prime Minister David Cameron announced that over 6,000 mortgage applications had been supported by Help to Buy's government guarantee for home loans, with 750 house purchases fully complete since the scheme's October launch.
However, critics are warning over the bubble potential as demand in the housing market is sent soaring by Help to Buy and new home supply falls far short. Moreover, this market imbalance is driving house prices higher as incomes are in real terms decline.
"Any help for first time buyers struggling to get on the property ladder is to be welcomed. But rising demand for housing must be matched with rising supply if this scheme is to bring the cost of housing within the reach of low and middle income earners," said Emma Reynolds MP, Labour's shadow housing minister.
"Instead under this government housebuilding is at its lowest level since the 1920s. You can't deal with the cost-of-living crisis without building more homes. That's why Labour has committed to building 200,000 homes a year by 2020."
An estimate in a parliamentary briefing paper puts the supply needs of the UK at 290,500 new homes a year. However, in the year to September 2013 there were just 117,110 housing starts according to official figures.
Credit conditions for homebuyers have been tight since the financial crisis. Banks, stung by their exposure to risky mortgage lending before the meltdown, ramped up borrowing costs and deposit requirements. As a result, many people were shut out of the housing market.
Cameron said his government introduced Help to Buy "so hardworking people with sufficient earnings can get on, fulfil their aspirations and enjoy the security of owning their own home."
Business Secretary Vince Cable, a Liberal Democrat minister in the coalition government, said Help to Buy should be reviewed in light of the UK's emerging economic recovery because the scheme was "conceived in very different circumstances".
Official figures show that in the twelve months to October 2013 UK house prices rose 5.5% on average across all regions. In London alone, where Cable said there is a "raging housing boom", prices had rocketed 12% across the year.
The government guarantee is only the second part of the Help to Buy scheme. The first part, in operation from April 2013, offers first time buyers an interest free equity loan worth up to 20% of a newbuild property's value.