Help to Buy Numbers Treble
According to a report from RICS (Royal Institute for Chartered Surveyors) the Help to Buy numbers trebled in the last two months of 2013, so will demand outstrip supply in the UK this year?
A report by the NAEA (National Association of Estate Agents) following their recent member’s survey states that during November its members sold an average of nine homes per estate agency branch, and on average two of those were Help to Buy purchasers.
The Help to Buy initiative launched at the beginning of October 2013 and we dealt with the different Government housing market schemes in our earlier blog post.
Nationally more than 2000 people took advantage of Help to Buy in the first month after launch – by December that figure nearly tripled to 6000. These new mortgages will equate to around £1 billion of new lending to homeowners who may have been deterred or prevented from borrowing because of the need for a lump sum for their deposit before a mortgage company will lend money.
David Cameron Comments on the Increased Demand for Housing
Prime Minister David Cameron hopes many more people will be persuaded to get on the property ladder in the New Year, giving the property market and the wider economy a welcome boost
RBS, HSBC, Lloyd’s, Virgin Money and Aldermore are already offering these mortgages but they will soon be joined by Barclay’s and Santander who plan to introduce their own Help to Buy products this month.
The property market will no doubt continue to heat up as we head towards one of the busiest times of year and Cameron observes:
“. . . too many people have found themselves frozen out of the market in recent years as a result of the size of the deposit required.
That is why as part of our long-term economic plan we introduced the Help to Buy scheme, so hard-working people with sufficient earnings can get on, fulfil their aspirations and enjoy the security of owning their own home.”
UK Economic Growth Relies on a Booming Property Market
The UK economy is so dependent on a raising property market that the Government is always under pressure to find ways to keep the figures rising upwards, but if the market gets too hot it could cause a bubble that would be very painful for our recovering economy if it should burst.
RICS senior economist Josh Miller warns:
“The pace of demand is exceeding that of supply in every part of the country. Clearly the momentum in the market is growing. Help to Buy, funding for lending, and the clear commitment to keep interest rates low for a long time, all three are having an effect.”
Build More Housing to Stabilise Economic Growth
The best way to stabilise the market is to increase supply so that it tracks this increased demand. Providing that buyers can afford to purchase we are unlikely to ever have a situation where available housing stock outstrips demand in London. Therefore building more housing is the answer to increased, gradual and sustainable economic growth in the Capital.
The Shadow Housing Minister Emma Reynolds comments that:
“Any help for first-time buyers struggling to get on the property ladder is to be welcomed.
But rising demand for housing must be matched with rising supply if this scheme is to bring the cost of housing within the reach of low and middle income earners.”
It is certainly true that without a reliable release of new more affordable housing onto the market that the housing ‘bubble’ will stall and even burst, if house prices rise sharply in response to this increased demand. This could spell economic disaster for all of us.