It will still be a top-down recovery for the UK housing market, despite Budget 2013 containing measures that will act as a boost for the lower tiers. Lucian Cook, director of Savills research, explained that while provisions have been made to help buyers onto and up the housing ladder, most activity to stimulate recovery will occur in the prime property investment sector.
"Recent budgets have challenged the top end of the market; this one looks to support the bottom end," he said. "We still expect a top down recovery as we've seen in previous cycles, but this budget should give a boost to the lower tiers of the housing market."
Nonetheless, the Help to Buy initiative looks set to have a considerable impact on the "functionality" of the industry and transactions levels, compared to previous schemes, such as FirstBuy and NewBuy. House building will also benefit under the terms of the new Budget, but forecasts expect construction to still be below the 230,000 needed per annum.
However, the Help to Buy scheme creates a unique opportunity for developers, as new builds become incentivised. Savills estimated that the GBP 3.5 billion Equity Loan scheme will support 75,000 new home sales over the next three years. This is the equivalent to 25,000 more sales a year and will increase transaction levels across the entirety of the market by around 2.5 per cent. Savills maintain that this impact will be even bigger in the first time buyer and second stepper segments.
What's more, the extension of the Funding for Lending scheme will help to support Help to Buy, reducing the cost of mortgage debt. "Previous measures have largely ignored the plight of second steppers who have found themselves stuck on the first rung of the housing ladder having seen their housing equity at best standstill, these measures given them some hope of trading up," Mr Cook said.
Nevertheless, big change will still need to take place at the top to bring about recovery, while even if housing transaction predictions are met, the country will still be 30 per cent below long-term trends. Mr Cook explained that this will continue to put pressure on the private rented sector.
- Wednesday 27 March 2013