"Larger homes are therefore the ‘go to’ property being built, but in the widest possible sense, are they the type of new homes we need to get more first-timers onto the ladder? "
Housing already feels like a central tenet of the new Government’s policy priorities, perhaps because it feels it can deliver in this area within a relatively short space of time, although having said that, I’ve not met anyone in our sector who doesn’t feel like 300,000 new homes a year is going to be incredibly challenging.
However, I am cautiously optimistic about the Government being able to improve the yearly figure of new-builds, as long as it is able to hold its nerve in terms of keeping councils to targets, and indeed being able to support the housing developers for whom it is going to be almost totally reliant on.
Perhaps it is hoping to be less reliant on the big housing developers though, as I read just this week that it is hoping to review its own borrowing regulations in the hope of freeing up an extra £50 billion for housing, and other, projects.
That would be a considerable sum in anyone’s book, but at the same time I can’t help but be incredibly cautious about what such extra borrowing means for the public finances, particularly when we’ve already been told there is an existing £19bn ‘black hole’ that needs filling.
At the same time, I fully recognise that if we keep doing the same thing, we are only going to get the same result, and every year we have failed to hit a 250,000 new-build housing target over the last 20 or so years, every year we have fallen further behind in the supply needed to meet demand, particularly in terms of our population increase.
The other point to make here is around the need for ‘affordable homes’ – perhaps understandably when looking at new developments, housebuilders have tended towards those that are going to generate the most profit for them, especially when you consider the cost of everything has gone up considerably in recent years.
Larger homes are therefore the ‘go to’ property being built, but in the widest possible sense, are they the type of new homes we need to get more first-timers onto the ladder? Probably not. There not only needs to be an injection of all types of homes but a real focus on the delivery of ‘starter homes’ in order that more first-timers can ‘start’ their homeowning journey.
Let’s be in no doubt, this is an incredibly complex area to work within, particularly from a policy point of view, which is probably why Government after Government have tended to provide simple solutions they hope will get us the supply we need.
It is no doubt time for a more nuanced and 360-degree view of the entire housing market which can work not just for the next five years, but the next 50. If we want to get more people into homeownership then that has to be a credible strategy aim; whether we have politicians and policy makers with the wherewithal to deliver, remains to be seen.
What we will also need of course is a steady supply of mortgage finance that genuinely caters for first-time buyers’ needs, and understands that – for the most part and historically – homeownership has stemmed from the ability to secure a mortgage with a 5% deposit, at a reasonable rate.
I’m pleased to say that there are signs of progress in that regard, and lenders have certainly woken up to the fact that first-time buyers are a durable ownership demographic.
Every month I look at the number of 95% LTV products available to first-time buyers, using the Nationwide’s most recent average house price figure. For September this was £266,094, a 0.7% monthly and 3.2% annual increase, which of course is something that buyers will need to be aware of.
For the past 12 months or so, house prices have barely moved, but if they are now starting to inch up again, that increases the deposit requirements for first-time buyers. Of course, more supply to meet this demand should help stabilise prices.
High LTV product supply has also stayed relatively stable this month, with 252 95% LTV products available, down just one from this time last month, although we have seen some shifting in terms of ‘Best Buy’ pricing.
In the five-year fixed-rate space, Progressive’s Northern Ireland-only 4.65% leads the way, with wider national options available from Coventry BS at 4.95% and Skipton at 4.98%. The best two-year fix is also offered by Progressive at 5.09%, while Coventry offer a 5.25% deal and Halifax a 5.27%.
In the discount/tracker space, once again Progressive have a two-year discount at 5.14%, Loughborough continue to offer a three-year discount at 5.15% and Newbury also offer a 5.19% three-year discount.
Interestingly, when you compare those discount and variable deals, they are not a million miles away from the two-year fixed, and one wonders if these might prove slightly more popular than historically if borrowers feel that rates will continue to fall over the next 12 months, as many expect.
