Research published by the Intermediary Mortgage Lenders’ Association (IMLA) reveals that 60% of lenders and 59% of brokers identify a potential house price bubble as the single factor most likely to undermine the government’s latest housing scheme.

While lenders anticipate a 2.7% increase in average UK property prices by the end of this year, if current market performance (aided by Help to Buy) is sustained, that figure could rise to 11% by the end of 2016, when Help to Buy is due to be removed, the study found.

That would leave the average house price at £180,265 by the end of 2016, close to the November 2007 peak of £181,975.

The second, indemnity, part of the Help to Buy scheme, due to be introduced in January 2014, could push that figure even higher.

Peter Williams, executive director of IMLA, commented:

“Pleasing though it is to see increasing levels of activity in the market and a swell of consumer interest, these findings spell out the importance of keeping control over any future growth.

“There is a clear consensus that first-time buyers stand to benefit most from the second part of Help to Buy. But if house prices continue to rise for the duration of the scheme, then in essence we will be giving with one hand and taking away with the other. Moreover the exit from the scheme will need to be managed very carefully so it without causing serious harm to the market.

“If people are struggling to raise deposits in the current climate then a further 11% increase in house prices will lift the property ladder even further out of reach for some. House builders are attempting to bridge the ever growing chasm between supply and demand which is going to be essential to ensure we help more people to access the property ladder without creating new hurdles in the form of inflated house prices.

“In the meantime, the pressure is on to ensure Help to Buy is more inclusive than divisive. Agreement on capital weightings and on the fee lenders will be charged to participate are crucial to ensuring the scheme is made affordable for lenders as well as consumers if we want to see a similar impact as the current equity loan scheme.”