2nd Sep 2014 09:55
LONDON (Alliance News) - The majority of home buyers using the UK government's mortgage financing scheme have been first-time buyers, according to official figures released Tuesday.
Out of a total of 48,393 Help to Buy completions since the scheme began, 82% have been made by first-time buyers, the Department for Communities and Local Government said.
The first phase of the Help to Buy scheme in England started in April 2013, making buyers of newly-built homes eligible for a 20% equity loan from the government on top of their 5% deposit.
The scheme has since been extended until 2020 from its original 2016 end date. The second phase - which commenced in the autumn of 2013 - guarantees a portion of a buyer's mortgage on new and existing homes. It has not so far been extended beyond its current end date of 2016.
The latest statistics were released on the day housebuilder Redrow PLC reported a surge in pretax profit and revenue for the full-year, as it ramped up legal completions spurred by the scheme.
The DCLG said the Help to Buy figures show that while the scheme continues to account for only a small percentage of overall mortgage transactions - 2.5% for mortgage guarantee and 4% for the equity loan - the scheme is successfully targeting those who need help getting onto the housing ladder.
The average house price for both parts of the scheme, at GBP187,000 remains significantly below the national average house price of GBP265,000.
The scheme has however, been controversial with its detractors warning that the housing market may be rising too quickly and is in danger of becoming a new bubble, fuelled further by Help to Buy.
Nonetheless, the scheme has proved popular with home buyers, especially those in the north of the country. Some 763 Help to Buy completions have been recorded in Leeds since the scheme was launched last year, with 589 in Birmingham, 489 in County Durham and 426 in Manchester.
London however remains a tough market for first-time buyers; 94% of the 48,393 Help to Buy completions took place outside of the capital.
The DCLG's figures are supported by the latest results of a Markit Economics and the Chartered Institute of Purchasing & Supply survey which Tuesday said that UK construction activity grew at a faster pace in August, defying expectations of a slow down.
The Markit/CIPS construction purchasing managers' index, or PMI, rose to 64 in August from 62.4 in July, less than the 61.5 expected by economists. This marked the fastest rate of increase since January and the second-strongest rate of expansion since the pre-recession peak of August 2007.
A reading above 50 signals expansion in construction activity.
The increase in construction activity was driven by broad based improvements in all the sub-categories. Residential construction expanded the most, though the rate of expansion moderated slightly to a three-month low.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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