First-time buyers are already returning to the market and house sales are 12% up on last year – but the Help to Buy scheme is still needed, one of Britain’s biggest estate agents argued this morning.
David Brown, commercial director of LSL, which sponsors the Acadametrics house price survey, said: “2013 will be remembered as the year first-time buyers returned to the market.
“Up until this year the market was still in trouble thanks to the financial crisis. It was a long way from recovery. What a difference six months makes.
“In that time we’ve seen banks ease criteria on mortgages for people with small deposits, which has opened the door to new buyers who have spent years on the outside looking in. More people are in work. Inflation has begun to ease. And clearer forward guidance on interest rates has brought more certainty and confidence.
“The return of the first-time buyer has triggered a ripple of activity all the way up the housing ladder. It is starting to unclog the blockage at the bottom end of the market, which is helping make the whole system more fluid.
“Demand has increased significantly in a short space of time, and raced ahead of the supply of homes, which is causing house prices to rise.”
According to the Acadametrics survey, house prices in the UK now stand at an average of £235,534 – up 3.8% on September a year ago.
Brown said the recovery was, however, only “fledgling”.
He went on: “First-time buyer numbers are still some way short of their historic levels. It is not a ‘boom’. Or a ‘bubble’. It is a market correction, albeit a fairly quick one.
“The only ‘boom’ is the loud noises coming from alarmists and sensationalists warning about a return to the bad old days of the 2000s. We’re not even close to that.
“There is no sub-prime mortgage lending, no lending above 95% LTV. Credit checks are tough, rates are fairly high on high LTV mortgages, and lenders now carry out stringent affordability checks for every single mortgage.
“Plenty of would-be buyers in the north are still struggling to get a mortgage and get on the housing ladder. The south-east is dominating the market because it has more equity-rich buyers, with London the target for scores of foreign property investors.
“The improvements in the north are much less pronounced.
“Help to Buy is needed to make the market accessible to the many, not just the few. In the south-east, buyers need the scheme because house prices are so high. In the north, house prices are much lower, but so are incomes and wage growth. The whole country will benefit from the scheme.”
LSL’s surveying and valuation arm, e.surv, estimates that there will have been 68,212 house purchase loans last month – the highest since February 2008 and 36% up on September last year. It also estimates that lending to buyers with small deposits was at a post-2008 high.
Richard Sexton, director of e.surv, said: “The housing market is speeding back to recovery, and that’s before Help to Buy even begins to kick in. In September, more people were buying a house than at any point in the last five-and-a-half years.
“The introduction of Help to Buy 2 could floor the accelerator, and we could see unprecedented quick growth.”
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