In Q1 2014, the number of buyers chasing each property hit its highest level since 2008. On average, 12 buyers are chasing each new property coming on the market, an increase of over 20% compared to the 9.7 buyers in Q4 2013. In London, the figure was much higher with 25 buyers for every new property.
Nearly half (47%) of people aged between 20 and 30 live in a city, a number expected to reach 50% by 2018 if current rates of growth continue. At a time when the population of England is ageing, the average age of residents within the 10 largest cities has fallen since 2001.
Countrywide plc has found that significant regional variations exist in how and where the Help to Buy Equity Loan scheme is having the greatest impact. Over the past nine months, almost 1 in 3 (28%) of new houses built in the North East sold via Help to Buy Equity Loan compared to just 1 in 10 (9%) new houses built in London, according to research in Countrywide plc’s Countrywide Quarterly Market Review – Q1 2014.
In the first ten months of the Help to Buy Equity Loan scheme being introduced, a total of 14,823 new properties have been purchased through the scheme, the majority by first time buyers. A further 4,666 new homes have been reserved. This equates to 1 in 5 (19%) of all private dwellings built in England being sold through the scheme.
A first for research into the Help to Buy scheme, Countrywide plc has found that more new homes have been bought using the Help to Buy Equity Loan scheme in areas which have seen the smallest increases in house prices over the past 12 months. House builders in areas of the North East in particular, where house prices remain well below 2007 levels, have relied heavily on the Help to Buy Equity Loan scheme to sell houses. In Newcastle, nearly half (49%) of new private homes built in the past nine months have been sold using an equity loan.
If developers believe they can sell what they build, they tend to build more of it. Up to a third of some house builders order books are composed of homebuyers using the Help to Buy Equity Loan scheme to buy their new home. This highlights the extent to which the scheme is supporting new house building, and the reliance of developers on it outside London and the South East to achieve sales.
Commenting on the findings Grenville Turner, Chief Executive, Countrywide plc, said:
“Claims that the Help to Buy Scheme is causing a housing bubble are far from the truth and the facts speak for themselves. As a proportion of transactions both parts of Help to Buy together support only 2% of transactions in London compared with 10% in the North West, where support is most needed.
“The scheme has had a positive impact on house builder confidence with many now believing that they can sell what they build, which as we know means they will build more. The extending of the equity loan guarantee allows developers to plan with some certainty that demand will continue to exist in 12 months’ time and goes some way to bridging the increasing gap between new supply and demand for property in the UK.”
The ratio of buyers to sellers has increased by 25% in Q1 2014, from 9.7 buyers to each new seller in Q4 2013, to 12.3 buyers to each new seller in Q1 2014. Consumer sentiment driven by a recovering economy, government support and increasing mortgage availability is stimulating new and existing demand but we still expect the number of transactions in 2014 to be less that 75% of the long run average.
January 2014 saw the highest level of demand with 13 buyers chasing each new property coming on the market. In London, the figure was much higher with 25 buyers for every new property, an increase from an average of 11 as recently as July 2013. However, towards the end of the first quarter in March, there were signs that demand eased off slightly as the market slowed to draw breath, but a shortage of stock in many areas remains, especially in London where the number of properties on the market has fallen 20% year-on-year.
House price increases are yet to tempt sellers to the market in significant numbers and equally competition for property in the Capital makes the construction of longer chains difficult and thus making it harder for people to move home. Sellers who receive multiple offers for their property are more likely to accept one from a first time or cash buyer because of the shorter chain they provide.
The ratio of buyers to sellers has increased by 25% in Q1 2014, from 9.7 buyers to each new seller in Q4 2013, to 12.3 buyers to each new seller in Q1 2014. Consumer sentiment driven by a recovering economy, government support and increasing mortgage availability is stimulating new and existing demand but we still expect the number of transactions in 2014 to be less that 75% of the long run average.
January 2014 saw the highest level of demand with 13 buyers chasing each new property coming on the market. In London, the figure was much higher with 25 buyers for every new property, an increase from an average of 11 as recently as July 2013. However, towards the end of the first quarter in March, there were signs that demand eased off slightly as the market slowed to draw breath, but a shortage of stock in many areas remains, especially in London where the number of properties on the market has fallen 20% year-on-year.
House price increases are yet to tempt sellers to the market in significant numbers and equally competition for property in the Capital makes the construction of longer chains difficult and thus making it harder for people to move home. Sellers who receive multiple offers for their property are more likely to accept one from a first time or cash buyer because of the shorter chain they provide.
Commenting, Grenville Turner, CEO, Countrywide plc, said:
“Cities are playing an increasingly important role in leading the economic recovery. While understandably London receives a significant amount of attention, cities outside London have been quietly growing, adding new jobs and people at a record rate. The London vs. the rest of the country is a false debate. In reality, London now competes on a global stage for different sources of investment, people and resources. While regional cities do compete internationally with other cities which share similar economic profiles, primarily they compete on a national level with each other.
“Competition and the development of clusters of expertise have driven young people to cities and in doing so have reversed their ageing populations. While the average age of the country increases, in our largest cities it is decreasing. A rapidly growing private rented sector, affordable housing and good public transport are attracting young people, and the social and financial barriers to life in a city are reducing. Flat, car and bike sharing schemes have all grown rapidly which have significantly reduced the upfront costs needed to live and work in a city. In a country whose population is ageing and number of retirees growing, cities will play an increasingly important role in generating future tax revenues and economic growth.”
