Dr. Robert Kelly:

When we think about any of these things that operate on what I call the demand side - in essence, giving some type of policy treatment to a household - and if you are thinking about what impact they have on supply, they can only work one way. They can have other benefits. Let us say you want to target a certain cohort of households that you feel are having particularly difficult access to housing, then you can design a scheme like this under certain incomes in certain areas. If you want to incentivise certain types of living - let us say it is urban density - there could be a number of policy reasons you want to do this. Then this demand side can be very effective at incentivising households to do this because you are essentially creating an incentive. If your goal is to do this to increase the supply of homes, the only way you can do it, if it is very broad, is by pushing up prices and hence making it more attractive to supply houses for development. You are offsetting that viability by creating a higher price.

The first home shared equity scheme has elements of both. It talks a little bit about incentivising supply, and that is why it is on the new housing side but it also has income controls and limits within it with respect to house prices. It depends on what the policymaker is targeting, and whether they are targeting some of that differential. If it is purely to increase supply, the only channel through which you can do it is to increase prices.