28th May 2026
A Closer Look at Scotland’s New Buyer Support Scheme.
When the Scottish Government says the First Homes Fund will reopen by the end of June, and that 50,000 first‑time buyers will be supported during this parliament, the headline sounds positive. More young people helped onto the ladder. More families able to buy. More movement in a sluggish housing market.
But beneath the political optimism lies a harder economic question — one that economists, housing analysts, and even the Institute for Fiscal Studies have been raising for years:
Does giving buyers more money simply push up house prices?
To answer that, we need to look at how demand‑side subsidies behave in a market where supply is tight — and Scotland, especially the Highlands, is a textbook example of a supply‑constrained market.
The First Homes Fund works by offering equity support to first‑time buyers, reducing the size of the deposit and mortgage they need. On paper, this makes homes more affordable. In practice, however, it increases the number of people able to bid for the same limited stock of homes. When more buyers chase the same number of properties, prices tend to rise. This is not political opinion; it is basic market behaviour, and it has been observed repeatedly in the UK.
We saw it with Help to Buy, where developers increased new‑build prices because they knew buyers had government-backed purchasing power. We saw it with stamp duty holidays, which inflated prices far more than they stimulated supply. And we saw it again during the pandemic, when cheap borrowing fuelled bidding wars across Scotland, including in Caithness, where remote working suddenly made rural homes more attractive.
The First Homes Fund risks repeating this pattern. By making more money available to buyers, it increases demand without increasing supply. The Scottish Government can support 50,000 buyers, but unless it builds 50,000 additional homes, the pressure simply shifts onto the market. Sellers benefit. Developers benefit. Buyers compete harder. Prices rise.
This is especially true in areas like the Highlands, where housing supply is chronically limited. Planning delays, construction costs, infrastructure gaps, and the dominance of small local builders all restrict the number of new homes coming onto the market. In Caithness, the problem is even sharper: population decline has reduced private-sector building, while public-sector building has not filled the gap. Injecting more purchasing power into such a market does not create more homes; it simply redistributes who can afford the few that exist.
Supporters of the First Homes Fund argue that it helps people who would otherwise be locked out of ownership. That is true for some households. But the wider effect is that prices rise for everyone — including those not using the scheme. The benefit is concentrated on the individuals who receive the subsidy, while the cost is spread across the entire market.
There is also the question of fairness. When government money inflates prices, those who do not qualify for support — or who narrowly miss out — face higher barriers. Renters, single-income households, and those without family help are pushed further from ownership. Meanwhile, developers and sellers enjoy higher returns without delivering additional supply.
The real solution to Scotland’s housing affordability crisis is not more demand-side support but more homes. That means planning reform, public-sector building, land-value capture, and long-term investment in infrastructure. Without these, every new subsidy risks becoming another version of Help to Buy — politically popular, individually helpful, but structurally inflationary.
So does the First Homes Fund push up house prices?
Yes — unless it is paired with a serious expansion of housing supply.
And at present, Scotland is not building enough homes to absorb the extra demand.
The scheme will help some first‑time buyers, but it will also raise prices for others, deepen competition in tight markets, and reinforce the long-standing pattern where government support ends up in the pockets of sellers rather than buyers. In Caithness and across the Highlands, where supply is thin and demand is increasingly shaped by external pressures, the effect may be even more pronounced.
Scottish Government Plan
First Homes Fund open by end of June - 50,000 first-time buyers supported in this parliament
The first round of applications for a First Homes Fund will open by the end of June, providing first-time buyers with a £10,000 contribution towards a deposit on their first home.
The shared-equity scheme will be open to all prospective owners looking to make their first step on to the property ladder, with a limit of £300,000 on the value of the property purchased.
It is expected the first phase of the fund will support 2,000 households over the first 100 days of this Government and 50,000 over the course of this Parliament.
Cabinet Secretary for Social Justice and Housing Shirley-Anne Somerville confirmed the scheme’s opening to the Scottish Parliament.
Ms Somerville said "For too many people across Scotland, particularly younger people and first-time buyers, home ownership has felt increasingly out of reach. In communities the length and breadth of our nation, we are hearing the same story; people saving what they can but finding that the cost of a deposit is simply too great a barrier.
“That is the context in which this Government will act. This is a direct response to the experience of people across Scotland. We have listened and are taking fast, decisive action.
“The Fund sits within a broader programme of action and supported by a record £4.9 billion investment in affordable housing over the next four years.
“We promised we would support first time buyers and we are delivering.”
Background
The First Homes Fund is a shared-equity scheme and will be open to applications from first-time buyers in Scotland purchasing either a new build or existing property with a mortgage. A first-time buyer is anyone who does not own, or has not previously owned, a property in Scotland or anywhere else in the world.
The Scottish Government will provide a contribution of up to £10,000 towards a home with a property value of up to £300,000. The Scottish Government will have an equity share in the property, although the homeowner will own and have title to the property. There are no monthly payments to be made towards the Scottish Government and no interest will be charged. The Scottish Government’s percentage equity share would normally be repaid when the home is sold.
More information on how to apply will be available in due course.