Evaluation of Equity Loan Scheme

This paper analyzes the impact of Help to Buy on housing affordability in different regions of the UK. Unlike most previous studies that focused solely on absolute price levels, this study construct an analysis based on the affordability gap indicator to disentangle macroeconomic shocks. This paper adopts a flexible strategy, utilising differences in policy exposure across regions for identification. In the empirical analysis, it is demonstrated that the deterioration in housing affordability follows long-term structural trends. Regarding policy effects, the paper finds that the implementation of Help to Buy did not lead to significant deviations in affordability trajectories from their counterfactual trends; a potential explanation for this result is that affordability crises are mainly driven by supply-side inelasticity, rather than insufficient demand; therefore, Help to Buy is more of a passive adaptation rather than a dominant force in changing market equilibrium.