Government funded equity loans have been a key means of unlocking consumer demand. With full take up, the major government funded schemes could fund 41,500 sales between 2009 and 2014. NewBuy, has achieved 1,500 reservations so far, a similar profile of uptake to FirstBuy in its early stages.
The Council for Mortgage Lenders anticipates stronger take up of NewBuy in the coming months, following a concerted marketing effort by builders, while the recently launched Funding for Lending initiative has prompted reductions in NewBuy mortgage rates.
These factors should further increase the scheme’s attractiveness, stimulating buyer interest. The government has capacity to assist 100,000 buyers with their new home purchase through the scheme.
MI New Home, Scotland’s equivalent of NewBuy, was launched in September, and aims to help 6,000 households get on the property ladder.
Small housebuilders
Supply-side constraints remain, as housebuilders have focused on recapitalising, matching product to demand and scaling back output.
Smaller players continue to be restricted by the amount of money they can borrow as banks tighten their lending criteria, unable to raise sufficient equity to meet the level of gearing the banks require.
Consequently, small housebuilders delivering less than 500 units per year have seen their share of the market fall from 39% to 29% between 2007 and 2011 (source NHBC). Conversely, larger builders delivering between 500 and 2,000 units per year have grown their market share to 23% in 2011 from just 12% by output in 2007.
In response, the second round of the Get Britain Building programme (which provides funding for stalled developments) lowered the scheme threshold to just 15 units in the hope of boosting smaller operators. Of the 105 shortlisted schemes, 20 are for smaller projects of less than 25 units.
Housing demand
These supply and demand-side initiatives will help to unlock more strategic sites, critical to housing delivery, by boosting sales rates and raising land value to the required levels to make development viable. We estimate that 45% of the five-year land supply is tied up in such sites.
Over half of the unit supply from strategic land, some 585,000 residential units, is located in the East of England, Greater London, and the South East – those parts of the country with the greatest housing demand/ supply imbalance (see Map 1). With so much supply tied up on these large sites in these regions, seeing these through to delivery is critical to meeting housing requirements.
.jpg)