Help to Buy causes price of new-build homes to go up by more than 50% since 2013 launchThen Chancellor George Osborne introduced Help
Help to Buy causes price of new-build homes to go up by more than 50% since 2013 launch
- Then Chancellor George Osborne introduced Help to Buy in 2013
- Since then the cost of a new-build home in England and Wales surged
- From £189,950 in 2012 to £286,000, according to Office for National Statistics
Prices of new-build homes have soared by more than 50 per cent since the launch of Help to Buy, figures show.
They indicate the controversial scheme has helped push prices beyond the reach of millions of families.
The figures also suggest that rather than making property more affordable as intended, the scheme has actually forced buyers to take on even more debt.
A new-build home now costs 9.6 times what the average person earns in a year, up from 7.1 in 2012. Meanwhile, older properties have risen much more slowly relative to wages, up to 7.6 times earnings from 6.7
In 2012, the year before then Chancellor George Osborne introduced the policy, the average new-build home in England and Wales cost £189,950.
This has since surged by £96,050, or 51 per cent, to £286,000, according to the Office for National Statistics. By contrast, the price of an older house has risen by only £47,000, or 26 per cent, from £178,000 to £225,000.
A new-build home now costs 9.6 times what the average person earns in a year, up from 7.1 in 2012. Meanwhile, older properties have risen much more slowly relative to wages, up to 7.6 times earnings from 6.7.
Britain’s biggest housebuilders have seen their profits surge since Help to Buy was launched.
The equity loan scheme is intended to help young people get on the housing ladder. It allows families to buy new-builds worth up to £600,000 using deposits of only 5 per cent – or £30,000. The Government loans up to another 20 per cent, or £120,000, interest-free for five years.
In 2012, the year before then Chancellor George Osborne introduced the policy, the average new-build home in England and Wales cost £189,950
It has so far been used to buy 195,000 properties with £10.7billion of taxpayers’ cash.
The scheme has been blamed for pushing up prices because it effectively increases buyers’ budgets. Developers are accused of taking advantage of this extra financial firepower, knowing families are so desperate to get on the ladder they will pay the maximum they can afford. Critics say this has allowed developers to pocket billions of pounds and give their bosses gigantic bonuses.
Persimmon became the first developer to make profits of more than £1billion last year – helping fund a notorious bonus scheme which handed £85million to former boss Jeff Fairburn, and £45million to current chief executive Dave Jenkinson.
Fellow builders Taylor Wimpey made an £811million profit last year and Barratt Developments made £836million. James Daley, of consumer group Fairer Finance, said: ‘These figures reveal the truth behind Help to Buy. It’s not doing what the policy was set up for. We’re now in a situation for many people where the dream of owning a home is never going to be a reality.
‘The housing developers are cleaning up at the expense of first-time buyers doing everything they can to get on the property ladder – and the Government is stoking the fire.’
Labour MP Clive Betts, chairman of the Commons housing committee, said: ‘I would urge the Government to investigate the effect Help to Buy has had on the value of new-build properties. Those who are struggling to get on the property ladder should not have to pay more simply because they have no other option.’
New-build prices have risen most in London, where borrowers can get a bigger loan from the Government than elsewhere.
Because property is more expensive in the capital, the scheme allows buyers to get a loan equal to 40 per cent of a house’s value as opposed to 20 per cent elsewhere.
The Ministry of Housing, Communities and Local Government said: ‘We are committed to helping more people get on the housing ladder as we push to deliver 300,000 homes a year by the mid-2020s. Our Help To Buy equity loan scheme has helped make home ownership a reality for a new generation.’