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Why housebuilders are in love with Help to Buy
Help to Buy continues to create a number of headlines, both positive and negative, and it’s fair to say that there remain many reservations across the industry regarding some of the finer points of the programme.
This is hardly surprising as it is a multi-faceted scheme with knock-on effects for many sectors, none more so than for house builders. Focusing on the construction sector, in recent weeks City broker Jefferies is reported to be backing its judgment call on the Help to Buy programme by significantly raising its price targets on a number of house builders.
This is said to be due to the increased likelihood of these firms enjoying a rise in volumes and prices. In the broker’s view, although the sector has enjoyed a re-rating of late, it has been from a low base, and it believes there is more to come.
The new build market is an interesting one and, of course, this also incorporates NewBuy, the government backed ‘mortgage indemnity’ scheme which aims to help people with smaller deposits buy a new build home.
It’s obvious that the need for affordable housing is as pressing as ever and as a supporter of NewBuy we continue to demonstrate our commitment to helping home buyers make their way onto, and up, the property ladder. With this in mind it was encouraging to see recent statistics from the National House Building Council (NHBC) which reported that new home registrations in the UK reached a five year high in Q1 2013, rising 22 per cent to 31,740 when compared to the figure of 26,000 registration in the first quarter of 2012.
The NHBC said much of the rise in new-build properties was driven by the growth in affordable housing on the outskirts of the capital. It added that the figures suggested confidence was returning to the residential property market although new home volumes remained significantly below historic levels.
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This is welcome news. It’s clear that new build is a growth area which has evolved in recent times and that some of the lingering negative perceptions have been eroded thanks in no small part to some positive government intervention. However, there is no getting away from the fact that there is still work to be done to encourage sustained confidence and ensure that some of the overvaluing problems of the past are laid to rest.
David Finlay is intermediary managing director for Barclays