Help to Buy fuels demand for new homes
Activity in the new homes market has picked up since April, following the introduction of the government's flagship scheme, Help to Buy, placing more pressure on housebuilders to increase the supply of residential properties.
In the region of 4,000 people have reserved a new home using the Equity Loan available as part of Help to Buy scheme in the past two months.
The Equity Loan scheme, launched on 1 April, enables buyers to acquire a new build home with a deposit at least a 5% deposit, supported by an equity loan of up to 20%.
The hike in demand from buyers has already seen developers committing to increasing new homes supply, but there are concerns among some property commentators that the housing supply will fail to cater for growing demand, with around 500 people a week, on average, taking advantage of the scheme.
At 115,000 new homes per annum, housebuilding levels in England are currently around half those needed to meet the formation of new households at an estimated 220,000. Just 88,000 private for sale homes were built last year.
"The Equity Loan part of Help to Buy has got off to a flying start. It has been an unqualified success so far and 4000 reservations in just two months shows both the consumer demand for the scheme and developers' commitment to it," said Stewart Baseley, executive chairman at the Home Builders Federation (HBF).
Customer interest in the Help to Buy scheme has been very strong as it addresses the issue of lack mortgage finance at higher loan to values, according to Mark Clare of Barratt Homes.
He said: "Interest has been particularly encouraging from customers previously locked out of the market by high deposit requirements. Post the Budget announcement, compared with last year, we saw reservations step up 18% and visits to the Barratt website increase by around 30%. Our production will rise to meet higher levels of demand and it's likely that our completions this year will be up 20% on two years ago. We are investing in land and bringing it through planning too and we are also expanding the business by taking on 600 new apprentices and graduates to tackle the skills shortage that could constrain future growth."