Featured Sector: Private Housing

Last Updated:

24th January 2014

Private housing continues to lead the way as construction activity rises; ONS figures for the third quarter show that private housing output was 15% higher than a year ago. The Help to Buy scheme seems to have boosted housing market activity and has been credited by major house builders for increasing their confidence to invest in new sites.

A total of 15,410 reservations for new-build housing were made over the first six months of the equity loan programme. This number of houses is equivalent to 23% of the units of new build housing Glenigan tracked across the same six months.

While Help to Buy has supported the recovery in new housing activity, there are concerns that the recent extension of the scheme to existing properties is pushing up house prices that were already at relatively high levels compared to incomes.

According to the Halifax House Price Index prices in the three months to October were 1.6% higher than in the three months to July; this was slower quarterly growth than was seen in the previous four months. Key to the success of the scheme will be whether the greater pool of potential house purchasers encourages more owners to put their property on the market.

The government stated that 2,000 mortgages were approved under the scheme during its first month. For context; 4,509 extra mortgages were approved between August and September, before the loan guarantee part of the scheme became active. In total 66,735 mortgages were approved for house purchase in September according to the Bank of England.

The sector has also benefitted from the Bank of England’s Funding for Lending scheme; aimed at reducing wholesale funding costs for the country’s banks with the hope that this will be passed on to individuals and businesses in the form of lower interest rates. While the scheme may not have boosted lending levels significantly it is believed that declines in interest rates on mortgages and business loans in the past six months are a result of the scheme.