Politicians of every colour are vocal when it comes to housing, and we are constantly reminded in the media that not enough new homes are being built to accommodate our growing population, and many of those that are being built are simply too expensive to afford. So are new homes being sold for more than they are actually worth? And how are government schemes such as Help 2 Buy and shared equity contributing to the issue?
Firstly, I do not believe that new homes are being sold for more than they are worth. At Robert Sterling, we undertake hundreds of new build valuations for developers, large and small, and in different parts of the UK. In every instance without exception, they of course like to know how much they can ‘stretch’ to, but they also need to sell in a reasonable time period.
The cost of borrowing is still comparatively expensive, or at least it is expensive enough such that there is little or no advantage to a developer in holding out for an extra £10,000 or so on a property for another six months as the benefit will seldom outweigh the cost. What he wins on the swings may be balanced out by what he loses on the roundabouts. Developers have to keep many balls in the air at any one time, and while there may be a perception that new homes are expensive, it is the very fact that they are ‘new’ that creates the value, and not the developers’ greed.
So what help have schemes such as Help 2 Buy and shared equity been to new buyers and do they contribute to the perceived expense of new homes? Help 2 Buy has had a significant influence on assisting first time buyers get onto the property ladder since its launch. Shared Ownership schemes are also on the up, particularly with Housing Associations who are offering this along with their other staples of private rent, and outright sale.
There is always a risk that a shortage of homes will see prices rising, which isn’t really in anyone’s interest. There’s an urgent need for us to build more, but at prices we can all afford; that will mean greater accessibility to all types of purchase schemes. If that access becomes more difficult, or any schemes are withdrawn, building may cease, and that isn’t in anyone’s interests.