Sunak (pictured) defended his decision to make the scheme and the stamp duty holiday open to all buyers, not just those taking their first step.
And he also held back from admitting the UK had a housing crisis as his predecessor Sajid Javid did, instead saying that it was a longstanding “challenge” for young people to buy their own home.
Giving evidence to the Treasury Select Committee of MPs, Sunak was pressed on the availability of housing for young people and why he had not targeted both the tax cut and guarantee scheme solely at them.
On the guarantee scheme Sunak noted there was good evidence that “this is helping those that are getting on the housing ladder disproportionately to other home movers”.
He said: “We know from the previous time we did it, it helped 100,000 people buy a home and the average value of a home bought under the scheme was £160,000 compared to the average price of a home which at that time which was more like £225,000.
“And 80 per cent were first-time buyers, so it feels like it is a policy that is quite well targeted to help people get on the housing ladder.”
Support housing market jobs
For the stamp duty holiday extension, Sunak noted that it will taper down after three months “at which point first-time buyers will benefit”.
And he argued the initial scheme was necessary to protect jobs in the housing sector and restart construction after the pandemic pause.
“The motivation for the stamp duty holiday was to support the half a million people who are employed in and around the housing sector and because of what had happened in and around lockdown, this was a way to generate activity in that sector and to support all those jobs,” he said.
“Construction activity had completely stopped in spring and there were serious concerns about that, so this intervention has I think changed the mood on that and as you see there’s strong activity in the housing market, which is protecting those half a million jobs which is an important thing.”
However, there was evidence the housing market was already returning to pre-pandemic levels prior to the stamp duty holiday being introduced.
And the chancellor defended the UK’s high street banks, saying it was not a case of bailing them out for not supporting first-time buyers.
“No, I don’t think that’s right,” he said.
“You saw the same in the crisis last time and this tends to be what happens in a situation like this that lending at that end… products are removed as banks are prioritising and responding to economic circumstances, which is why this intervention is a good one and will make a difference.”