Home Residential PropertyFirst-Time BuyersHelp to Buy has caused house prices to surge for first-time buyers

Help to Buy has caused house prices to surge for first-time buyers

by LLP Reporter
8th Oct 19 11:58 am

First-time buyers in and around London have seen some of the biggest jumps in average house prices since the Help to Buy schemes were introduced from 2013, research from estate agency Springbok Properties has found.

Springbok Properties looked at the average cost of a first-time buyer property across the UK and where has seen the largest uplift in price growth since Help to Buy was introduced.

While Help to Buy has given many a leg up when it comes to climbing the property ladder, the influx of additional demand has also, perhaps ironically, pushed the cost of Help to Buy homes up considerably.

Across Great Britain, the average cost of a first-time buyer property has increased by 32.8% since 2013, almost on par with the regular market.

The typical price first-time buyers paid for a property in Barking and Dagenham was ยฃ281,396 in 2019, an alarming 70.8% increase from 2013.

This isnโ€™t the only East London region to see huge increases the average first-time buyer price, as they rose by 60.7% in Newham to ยฃ349,874 and 60.1% in Havering to ยฃ307,874.

Other areas to see a strong uplift are Waltham Forest in North East London, rising by 68.7% to ยฃ408,233; Thurrock in Essex, increasing by 59.2% to ยฃ237,635; and Stevenage in Hertfordshire, rising by 58.7% to ยฃ250,086.

Scotland and the North East more subdued

The City of Aberdeen, which has been hit hard by falling oil prices in the past few years, is the only area of the UK where first-time buyers are paying less than in 2013. The price they paid has fallen by -10.9% to ยฃ126,794 in 2019.

Some other areas of Scotland have only seen modest rises, as Inverclyde prices have risen by just 6.55% to ยฃ83,995, while South Ayrshire prices have seen a 6.9% uplift to ยฃ102,992.

In England, the worst climber is County Durham in the North East, where prices rose by 3.5% to ยฃ88,790. This is followed by Redcar and Cleveland, where prices climbed by 4.5% to ยฃ105,156; while behind that is Middlesbrough with an increase of 5.0% to ยฃ110,304.

It seems Help to Buy hasnโ€™t been enough to kick-start some of these markets into action.

Founder and CEO of Springbok Properties, Shepherd Ncube said, โ€œHelp to Buy was introduced by the previous government with good intentions โ€“ to assist would-be home-buyers in their first step onto the property ladder.

However, it seems that whilst around 200,000 buyers have indeed been supported, the unintended consequence in most areas has seen an above average hike in prices driven by the demand that Help to Buy has created.

First rung homes are supposed to be more affordable, but weโ€™ve seen the average price paid by a first-time buyer accelerate to similar levels as the wider market. Not only has this made it more difficult for todayโ€™s aspirational homeowner, but perhaps some tax-payers might question the wisdom of using their money to fuel house prices even further?โ€

About Help to Buy

Help to Buy is characterised by three schemes.

The Help to Buy Equity Loan was launched in 2013 and has buyers contribute a 5% deposit towards a new build, with the government providing a 20% equity loan on the property, or 40% within London, which is interest-free for the first five years.

This is available on new builds under ยฃ600,000 in England and ยฃ300,000 in Wales. The scheme is running until 2023, though after 2021 it will only be available for first-time buyers and there will be caps on the value of homes people can buy.

This is the most well-known of the Help to Buy schemes.

The second scheme is the Help to Buy Mortgage Guarantee, which also launched in 2013. This had the government act as guarantors against loans, while it wasnโ€™t restricted to new build. It was discontinued at the end of 2016.

The Help to Buy ISA was launched in 2015, which saw savers pay money into an ISA and then get a cash bonus form the government.ย  The scheme closed for new entrants in November 2019, while the bonus must be claimed by 2030.

First-time buyer average house price – Largest increases – (2013 – 2019)
Location Average FTB house price 2013 Average FTB house price 2019 Average FTB % change / growth (2013-2019)
Barking and Dagenham ยฃ164,791 ยฃ281,396 70.8%
Waltham Forest ยฃ242,021 ยฃ408,233 68.7%
Newham ยฃ217,777 ยฃ349,919 60.7%
Havering ยฃ192,331 ยฃ307,874 60.1%
Thurrock ยฃ149,239 ยฃ237,635 59.2%
Stevenage ยฃ157,609 ยฃ250,086 58.7%
Bexley ยฃ191,496 ยฃ302,769 58.1%
Luton ยฃ132,616 ยฃ209,073 57.7%
Thanet ยฃ125,923 ยฃ197,912 57.2%
Waverley ยฃ213,833 ยฃ334,473 56.4%
       
England ยฃ152,826 ยฃ206,018 34.8%
Wales ยฃ111,080 ยฃ139,436 25.5%
Scotland ยฃ101,872 ยฃ122,148 19.9%
Great Britain ยฃ145,436 ยฃ193,194 32.8%
       
First-time buyer average house price – Lowest increases (2013 – 2019)
Location Average FTB house price 2013 Average FTB house price 2019 Average FTB % change / growth (2013-2019)
City of Aberdeen ยฃ142,288 ยฃ126,794 -10.9%
County Durham ยฃ85,764 ยฃ88,790 3.5%
Redcar and Cleveland ยฃ100,603 ยฃ105,156 4.5%
Middlesbrough ยฃ90,389 ยฃ94,774 4.9%
Inverclyde ยฃ78,833 ยฃ83,995 6.5%
South Ayrshire ยฃ96,331 ยฃ102,992 6.9%
Hartlepool ยฃ84,690 ยฃ90,765 7.2%
Preston ยฃ96,794 ยฃ104,262 7.7%
Dumfries and Galloway ยฃ101,009 ยฃ109,147 8.1%
Darlington ยฃ102,465 ยฃ110,824 8.2%
       
England ยฃ152,826 ยฃ206,018 34.8%
Wales ยฃ111,080 ยฃ139,436 25.5%
Scotland ยฃ101,872 ยฃ122,148 19.9%
Great Britain ยฃ145,436 ยฃ193,194 32.8%

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