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Help to Buy responsible for 1 in 3 NE new homes sales

From Property Talk Live on April 2, 2014

Countrywide plc has found that significant regional variations exist in how and where the Help to Buy Equity Loan scheme is having the greatest impact.

Over the past nine months, almost 1 in 3 (28%) of new houses built in the North East sold via Help to Buy Equity Loan compared to just 1 in 10 (9%) new houses built in London, according to research in Countrywide plc’s Countrywide Quarterly Market Review – Q1 2014. In the first ten months of the Help to Buy Equity Loan scheme being introduced, a total of 14,823 new properties have been purchased through the scheme, the majority by first time buyers. A further 4,666 new homes have been reserved. This equates to 1 in 5 (19%) of all private dwellings built in England being sold through the scheme.

A first for research into the Help to Buy scheme, Countrywide plc has found that more new homes have been bought using the Help to Buy Equity Loan scheme in areas which have seen the smallest increases in house prices over the past 12 months. House builders in areas of the North East in particular, where house prices remain well below 2007 levels, have relied heavily on the Help to Buy Equity Loan scheme to sell houses. In Newcastle, nearly half (49%) of new private homes built in the past nine months have been sold using an equity loan.

If developers believe they can sell what they build, they tend to build more of it. Up to a third of some house builders order books are composed of homebuyers using the Help to Buy Equity Loan scheme to buy their new home. This highlights the extent to which the scheme is supporting new house building, and the reliance of developers on it outside London and the South East to achieve sales.

Commenting on the findings Grenville Turner, Chief Executive, Countrywide plc, said:

“Claims that the Help to Buy Scheme is causing a housing bubble are far from the truth and the facts speak for themselves. As a proportion of transactions both parts of Help to Buy together support only 2% of transactions in London compared with 10% in the North West, where support is most needed.

“The scheme has had a positive impact on house builder confidence with many now believing that they can sell what they build, which as we know means they will build more. The extending of the equity loan guarantee allows developers to plan with some certainty that demand will continue to exist in 12 months’ time and goes some way to bridging the increasing gap between new supply and demand for property in the UK.”

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Source: Property Talk Live