The end of the Help to Buy Equity Loan scheme coupled with rising mortgage rates and affordability requirements will mean fewer first-time buyers in the market next year, JLL has predicted.
The agency and property company has predicted that this will contribute to a 30% annual drop in home sales during 2023.
A survey by JLL found 64% of survey respondents did not expect they would have been able to buy a home without Help to Buy.
Almost half of respondents expected they would stay living in rented accommodation for longer than they had planned, pointing to increased demand for a rental property, in a market already struggling will an imbalance between supply and demand
Its research found that 20% of respondents had access to 15% of more of the purchase price, suggesting that Help to Buy allowed buyers to purchase a larger home than the open market would have allowed them to, or in a location they would have otherwise been priced out of.
David Jubb, director of London residential at JLL, said: “Help to Buy has been the backbone of the new homes sales industry since 2013 and it has become the fundamental tool to aiding many people step on to the housing ladder and afford their own home.
“Without Help to Buy we are likely to see increased demand for more affordable areas and price points across the country, where purchasers will no longer be able to buy at the higher price points which help to buy allowed them, with the support of a government backed equity loan.
“With a further 64% of our respondents indicating they would not be able to afford their own home without the scheme, it is likely to put increasing pressure of rental prices and demand in the short to medium term. In turn, this will support rental growth, and potentially the stability of the sales market too”.
The Help to Buy Equity Loan scheme was launched in 2013 and has helped more than 360,000 people to purchase a home in England.
The last applications for a Help to Buy loan had to be lodged by 31 October 2022, with home purchases to complete before 31 March 2023.
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Good Riddance.
Served only to inflate developers profits whilst also serving to reward them further by limiting the numbers of units coming to market/getting built.
If the scheme in the first instance had truly been designed for all then it wouldn't have been limited to new builds.
That it was tells you what you need to know.
The profitability curve of the major builders since the introduction of this gift to them provides further proof.
The effects have been to further inflate prices way way beyond the inflation levels a healthy market should see.
Gov needs to stop manipulating free markets.
It did not reduce the number of new build it increased them
Estate agents also increased profits at the same time
No it will not
We are selling apartments there are less buyers but not 30%
A lot of parents grandparents proving deposit
Some developers will do their own version we will if we need to
So what will stimulate demand other than reductions in values?
@Janet
The statistics show huge land banking and continued fall in new units numbers compared to demand levels.
Simply put, the developers 1) found that they could ask more, and more (following H2B intro) for their builds in, what is more, an ever relaxing credit environment, while 2) Ensuring that build levels way below those needed kept demand levels above supply.
It's been a rigged market.
@Ed, why stimulate at all? A correct market is a free market that allows affordability to dictate prices. The rabbit hole of constant stimulus post 2008 has only fed bubbles.
Having HMG underwrite property values is, effectively manipulation at best and corruption at absolute worst.
Land banking
Developers do not hold land generally
They make money when they build and sell not when they buy and hold onto it
Recently we have help of building as materials have been hard to come by so we have reduced the number of sites we ar5e building
The last thing we wanted to do was hold land in a good market - we wanted it out there asap
It is not at all rigged
Developers do not all work together to reduce the number of units
This is a fantasy conspiracy world
There was huge shortage of second hand homes for the demand
I guess all the existing homeowners rigged the market as well LOL
You have clearly never worked for a large developer or been a developer yourself
I guess you think that Covid was a conspiracy and that Elvis is still alive and working in a chip shop in Hounslow
Yes prices did go up with H2B
H2B was not needed when it came in the market was ticking along
My point entirely
Values will need to adjust and they will in a free and open way
Many people in the agency industry will find that a difficult process to handle
Agreed all the developers we have represented only want to build and sell, that’s how they get their return
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