Is the Future Bright for New Build?
With another Conservative government at the helm, it is business as usual for many involved in the new build sector. But it is this area in particular that has been given the biggest shot in the arm from several schemes, designed to re-invigorate a housebuilding market that is still lagging behind required volumes.
So with a government adamant they can now focus on new-build in this upcoming term, does the future look good for this crucial industry sector?
The only way is up…
Building up to the election, things were looking good for the new build market. The proportion of first-time buyers has risen from 35% to 50% since 2006, as a result of high rental costs, increased product choice and schemes such as Help to Buy. Meanwhile lending continues to grow, with the Council of Mortgage Lenders’ estimate for 2015 being £222 billion, the highest since before the financial crash. According to one leading lender, there were 118,760 new build purchases in 2014, up 8% from the previous year. There were also 137,000 new build starts in 2014, up an impressive 10%.
The increasing number of consumers that have used an intermediary for their mortgage is a positive outcome to stricter affordability post-MMR. This is especially true of first-time buyers, as they begin their journey up the property ladder with trepidation, making the expert advice you provide invaluable.
Scheme successes…
First-time buyers are still key to the success of the new build sector, which means things are looking good on the back of several governmental schemes designed to encourage and incentivise. Many schemes have been successful, especially Help to Buy, which saw 60% of all new build sales with a mortgage and over 80,000 purchase completions as a result of the schemes.
The Equity Share Scheme, or Help to Buy 2, has also proved successful and the number of new homes built last year would have been even smaller had this not been available. The Conservatives have already pledged that this scheme would continue until to the end of 2020.
A sunny outlook…
Starter homes are on their way. The conservatives have promised 200,000 by 2020, bringing advantages such as removing buy to let opportunities, earmarked brownfield land and reduced development costs. But some experts are dubious as to whether spending cuts can co-exist with promises such as this, putting even more onus on the private sector to supply.
It also looks like we will continue to see a record low Bank of England base rate for most of 2015, which will surely only be a positive thing as lenders continue to offer low deals and increase demand to spur on housebuilding. Experts believe that there are other factors forecasted to remain positive for the new build sector, such as increasing consumer confidence and stamp duty reductions.
With so many struggling to afford the current large deposits for their first home and the undeniable relationship between house prices and housing supply, it is welcome news to hear that the next Conservative government will focus on the new build sector over the next five years.