Wednesday, October 7, 2015
Commenting Johnny Morris, Research Director, Countrywide plc, said:
“Getting more homes built is an important part of the solution to our housing troubles, and the government’s focus on the issue is welcome. Undoubtedly an additional 200,000 discounted starter homes will help aspiring buyers into ownership sooner, and we hope the government’s plans will enable house builders to bring forward new homes developments that would previously have been unviable.
“But building homes to buy alone will do little to reverse the decline of home ownership. If the government wants more home owners at the end of their time in parliament, they need to consider much more radical measures than those proposed so far.
“The starter homes scheme with its 20% discount doesn’t help enough with one of the biggest challenges for first time buyers, saving a large enough deposit. Help to Buy has undoubtedly assisted with this, but even with the discount a first time buyer of a £250,000 starter home with a 90% LTV mortgage would still need to raise a £20,000 deposit (versus £25,000 without the discount). This isn’t the difference between buying or not buying, rather how long it takes to save, especially in areas where house prices are higher. It will mean a typical first time buyer couple would be able to buy a year sooner.
“The target to build 200,000 starter homes, and earlier announcements to build a total of 1 million homes by 2020 are extremely ambitious. To get to these numbers by 2020 we would need to double our house building to 250,000 a year. In order to get there, building would have to grow every year at rates not seen for over 25 years, 15% each year up to 2020. There simply isn't a wide enough variety of developers, or homes being built. Not to mention issues with skills and materials shortages. To reach their targets the government will have to get homes of all tenures (not just homes to buy) built by a larger number of smaller housebuilders, institutional private rented sector investors, housing associations and councils.”
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