A leading UK forecaster has praised the latest phrase in the Help to Buy scheme and said it is unlikely to cause a housing bubble.

According to citywire.co.uk, the Ernst & Young Item Club has upgraded its 2013 UK GDP forecast to 1.4 per cent from 1.1 per cent as a result of the launch of the second phrase of Help to Buy.

The first half of the scheme only provided house-buyers with a 95 per cent mortgage if they were buying a new build property. Now, buyers can apply the same deal to existing properties too.

The EY Item Club predicts the rise in house prices will help push construction activity up and the rise in the number of houses being purchased will drive spending up through expenses such as conveyancing and household goods, reports telegraph.co.uk.

House prices are expected to rise 3.5 per cent this year, 6.6 per cent in 2014 and 6.7 per cent in 2015, the EY Item Club says.

Such an increase is causing some experts to be concerned that their may be a housing bubble but Peter Spencer, the chief economic advisor to the EY Item Club, has disputed this idea.

“Despite the recent criticism of [Help to Buy], the chances of seeing another housing market bubble are extremely thin,” he said. “Household finances are also in much better shape, with debt to income ratios now at sustainable levels.”