In the Autumn Statement, the government announced it planned to build 400,000 affordable homes by the end of the decade, over half of which would be sold through the Starter Homes Initiative (SHI) which allows first-time buyers to benefit from a 20% discount off the market value. Alongside this objective it revealed plans for a London-focused version of the Help to Buy equity loan scheme which is exclusive to new build purchasers.
But RICS said while these initiatives were a positive step for housing, the build time for these homes would mean house prices and rents would continue to rise over the next 12 months.
The focus on building homes for first-time buyers through the SHI, while not expected to stem the upward trend in house prices, is predicted to have a cooling effect on the pace of growth, bringing it closer to the growth rate of household income.
One of RICS’ main concerns is the government’s focus on homeownership at the expense of other tenures. It believes that that the swathe of measures taken by the government to curb investment in buy to let will put further upward pressure on rents, compounded by the shortage of social housing being provided by local authorities.
Jeremy Blackburn, RICS head of UK Policy, said: “Ramping up housing supply is positive, but homeownership should not be the only game in town given the amount of private rented accommodation we need. A mix of market and rented housing is required and Starter Homes should not be seen as the panacea to solving the housing crisis, but as forming part of a larger mix to meet the wide range of housing need the country is crying out for.”
With house prices predicted to rise across the whole of the UK in 2016, East Anglia is continuing the trend seen in that region during 2015 with the highest predicted rise at 8%. Meanwhile, the North East is likely to see more modest price rises with a predicted increase for 2016 at 3%.