According to a recent Markit Survey focusing on the construction industry, November saw housebuilders constructing homes at a pace unseen since the start of the financial crash. Employment in that sector is increasing, and new orders are rising too. While this may sound like great news, it's all too easy to forget that the home building industry is predictably cyclical, and heavy investment in Help to Buy is not guaranteed to cause a sustained benefit for the industry. When the Help to Buy scheme eventually ends, housebuilders will have to rely on increasing prices to continue their growth.
The current scatter-spray approach to investing may be helping the short term bottom line for companies like Taylor Wimpey and Persimmon, but it could also create a new housing bubble. What is really needed is investment in home building in deprived areas that are in need of renovation. When the bubble inevitably bursts, it is those areas which will support the industry during the long and difficult recovery period.