by Mark Johnston
The new buy scheme was launched by the government in March this year and enables potential buyers of new build properties to buy with just a 5% deposit as the state and the builder will step in to reduce the risk to lenders.
The government claim that the scheme will also support an estimated 50,000 jobs in construction and related industries.
The Prime Minister, David Cameron, said the scheme is “a vital boost to the housing market, giving people good affordable new homes and backing thousands of jobs in the construction industry in the process”.
Recently house builders in the scheme have reported a ‘resilient’ spring selling season.
Bellway house builders have had a 9% rise in reservations in the 17 weeks to the end of May and this has meant that their 5% sales growth target was ‘secure’.
The property developer said that its average house now sold for £190,400, up 5% from last year and they also added that total completions for their full year would exceed last years total by around 300.
The developer has hailed the new buy scheme is helping to keep sales robust and in light of this they have recently spent £195 million on expanding their land bank after agreeing terms on 4,800 new plots.
Experts believe that it seems as though Bellway is well positioned to continue its strategy of increasing volume, average selling prices and operating margin.
Barratt developments also issued a statement recently to show their average house price was also up by 5% and that their reservations are up 25.3% on last year. They claim that around 1,600 customers have been registering their interest in the Barratts scheme each week since its launch back in March.
Barratt’s chief executive, Mark Clare, said “we have had our strongest spring selling season for 5 years”.
Therefore Barratt has now increased its forecast for completions over its financial year to 12,600 homes, which is up from 11,078 in 2010/2011.
A Department for Communities and Local Government spokesperson said “there is a real appetite from everyone to make this innovative and ambitious scheme a success”.
Although the majority of current figures show that property developers with in this scheme are in better positions than they were before, it is worth noting that while they were ready to go right from the start the same however can not be said for mortgage lenders in the scheme. They have struggled to get their relevant systems in place.
Many house builders have also complained that the interest rates which are now being offered on new buy products seem to be putting off some potential customers.
Analysis has shown therefore that the longer term success of this scheme will depend upon the approach of lenders to mortgage rates and credit scoring criteria.
In conclusion even in light of these figures from developers it is still too early to judge the schemes long term success.
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