Help to Buy has not pushed up first time buyer prices

Help to Buy has not pushed up first time buyer prices with the average cost to a first time home owner up by 32.8% across Britain since it was launched in 2013, almost on par with the regular market, new research show.

The largest increase was in Barking and Dagenham at 70.8%, taking the average price paid by first time buyers to £281,396 in 2019.

It was not the only East London region to see increases in the average first time buyer price, with Newham recording a rise of 60.7% in Newham to £349,874 and Havering up 60.1% to £307,874.

The data from Springbok Properties also shows that other areas to see a strong uplift are Waltham Forest in North East London up by 68.7% to £408,233, Thurrock in Essex, increasing by 59.2% to £237,635 and Stevenage in Hertfordshire rising by 58.7% to £250,086.

Aberdeen, which has been hit hard by falling oil prices in the past few years, is the only area in Britain where first time buyers are paying less than in 2013. The price they paid has fallen by 10.9% to £126,794 in 2019.

Some other areas of Scotland have only seen modest rises, as Inverclyde prices have risen by just 6.55% to £83,995, while South Ayrshire prices have seen a 6.9% uplift to £102,992.

In England, the lowest rise for first time buyers is 3.5% in County Durham to £88,790, followed by Redcar and Cleveland up 4.5% to £105,156 then Middlesbrough up 5% to £110,304.

Help to Buy hasn’t been enough to kick-start some of these markets into action, according to Shepherd Ncube, chief executive officer of Sprinbok Properties. ‘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,’ he pointed out.

‘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 home owner, but perhaps some tax payers might question the wisdom of using their money to fuel house prices even further’ he added.

The Help to Buy Equity Loan was launched in 2013 and has buyers contribute a 5% deposit towards a new build, with the Government providing a 20% equity loan on the property, or 40% within London, which is interest free for the first five years.

This is available on new builds under £600,000 in England and £300,000 in Wales. The scheme is running until 2023, though after 2021 it will only be available for first time buyers and there will be caps on the value of homes people can buy.

The second scheme is the Help to Buy Mortgage Guarantee, which also launched in 2013. This had the Government act as guarantors against loans, while it wasn’t restricted to new build. It was discontinued at the end of 2016.

The Help to Buy ISA was launched in 2015, which saw savers pay money into an ISA and then get a cash bonus form the government. The scheme closed for new entrants in November 2019, while the bonus must be claimed by 2030.