Authors
Summary
Demand-side policies which relax borrowing constraints for homebuyers, with the aim of increasing homeownership, are increasingly common. We propose a new approach to evaluating ex-ante how such policies would change individuals’ opportunity sets according to their income, location and parental background. We estimate the maximum deposit each non-homeowner could plausibly raise based on their observable characteristics using stochastic frontier analysis, and map this onto local house price distributions to calculate the share of local properties that become newly affordable under the policy. We apply this method to assess the 2013 ‘Help to Buy’ schemes introduced in the UK. Affordability gains under these schemes were concentrated among higher-income individuals, with those living in London and the South East seeing larger increases in maximum affordable price but smaller increases in the share of local properties they could afford. Our approach can be adapted to evaluate.