Help to Buy might have helped thousands of people get onto the property ladder but the demand has also, in a twist of irony, increased house prices as a result.
That’s according to Springbok Properties, which has found the average cost of first-time buyer properties in the UK have experienced huge hikes because of the popularity of the scheme.
Help to Buy launched in 2013 to help people – mainly first-time buyers – purchase new build properties. The Government initiative provides an equity loan of 20% (or 40% in London) to enable people to fulfil their homeownership dreams.
The buyer must stump up 5% deposit toward the property but the loan is interest-free for the first five years.
However, Springbok Property’s analysis shows, the average cost of a first-time buyer property has increased by 32.8% since 2013 – almost on a par with the regular market.
London property
In parts of London the prices have rocketed – indeed, in Barking and Dagenham the typical price first-time buyers paid for their property went up by more than 70% between 2013 and 2019.
In Newham and Havering prices soared by over 60% while Waltham Forest experienced increases of over 68%.
Things were very different in the North and Scotland. Indeed, in Aberdeen prices have actually fallen by more than 10% since Help to Buy was introduced in 2013, said Springbok Properties.
In England prices in County Durham in the North East rose by 3.5% while in Redcar and Cleveland they increased by 4.5%.
Springbok said Help to Buy hadn’t been enough to kick-start these markets into action.
Affordability
Shepherd Ncube, founder and CEO of Springbok Properties, said Help to Buy was introduced with the good intention to assist would-be home-buyers in their first step onto the property ladder.
“However,” he added, “it seems that whilst around 200,000 buyers have indeed been supported, the unintended consequence in most areas has seen an above average hike in prices driven by the demand that Help to Buy has created.
“First rung homes are supposed to be more affordable, but we’ve seen the average price paid by a first-time buyer accelerate to similar levels as the wider market.
“Not only has this made it more difficult for today’s aspirational homeowner, but perhaps some tax-payers might question the wisdom of using their money to fuel house prices even further?”
First-time buyer average house price – largest increases 2013 to 2019 (Source: Springbok Properties)
| Location | Average FTB house price 2013 | Average FTB house price 2019 | Average FTB % change / growth (2013-2019) |
| Barking and Dagenham | £164,791 | £281,396 | 70.8% |
| Waltham Forest | £242,021 | £408,233 | 68.7% |
| Newham | £217,777 | £349,919 | 60.7% |
| Havering | £192,331 | £307,874 | 60.1% |
| Thurrock | £149,239 | £237,635 | 59.2% |
| Stevenage | £157,609 | £250,086 | 58.7% |
| Bexley | £191,496 | £302,769 | 58.1% |
| Luton | £132,616 | £209,073 | 57.7% |
| Thanet | £125,923 | £197,912 | 57.2% |
| Waverley | £213,833 | £334,473 | 56.4% |
| England | £152,826 | £206,018 | 34.8% |
| Wales | £111,080 | £139,436 | 25.5% |
| Scotland | £101,872 | £122,148 | 19.9% |
| Great Britain | £145,436 | £193,194 | 32.8% |
Correct me if I’m wrong, but the help to buy scheme was/is to get first time buyers (mainly) on to the housing ladder, not manage up, down or stabilise housing market.
These are the kind of articles which cause confusion.
But like I say, I may be wrong.