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LONDON, Oct 9 (Reuters) - The British government's plan tohelp aspiring home buyers will boost the price rather than thesupply of housing, a member of the budget watchdog said onWednesday, just a day after the latest phase of the scheme waslaunched.
Critics of the Help To Buy initiative, which allows would-behomeowners to put down a deposit of as little as 5 percent onproperty, fear it could fuel another unsustainable boom in thehousing market, with an economic recovery already pushing priceshigher.
Stephen Nickell, a member of the Office for BudgetResponsibility, rejected the idea of a bubble but suggested thatdemand for homes in Britain was rising faster than their stock.
Quizzed by a lawmaker on his previous comment that Help toBuy could increase prices rather than supply, he replied: "Ipretty much said that, and I don't think my colleagues on the(OBR's) Budget Responsibility Committee would be moving up anddown to disagree with me."
"You've got a fixed stock of houses... The price has to riseto ration the stock of houses across the people who want to buy.It's genuine demand," he added.
The OBR, which was set up by the government to produceeconomic forecasts and assess fiscal policy but is independentof it, will publish an analysis of the scheme later this year aspart of its next set of predictions, Nickell said.
In an unexpected move last month, finance minister GeorgeOsborne asked the Bank of England's Financial Policy Committeeto keep a closer eye on Help to Buy.
The central bank will now do an annual check on whether the600,000 pound ($966,300) limit on properties that can be boughtunder the plan is too high and if fees charged to banks are toolow.
Nickell expressed little concern about the risk of a housingbubble so far.
"My feeling is that there's quite a long way to go in thehousing market before the FPC decides that they want tointroduce some sort of restrictions," he said.
Under the latest part of Help to Buy, the government willoffer to guarantee up to 15 percent of a mortgage, helping thosewho have been unable to put together the high deposits lendersnow require.
