The number of homes bought through the Government’s Help To Buy initiative has risen close to the 50,000 mark, helping fuel a surge in activity across the construction industry and record results for housebuilder Redrow yesterday.
Official figures showed 48,393 homes snapped up since the initiative was launched in April last year. Of these, 29,829 were made through the equity loan part of the scheme where the Government tops up buyers’ deposits, and 18,564 through guarantees to £2.7bn in mortgage loans under the second phase of the initiative, launched last October.
The scheme has come under fire for inflating house prices but continues to give a shot in the arm to the construction sector, which enjoyed a “blistering” August, according to the Chartered Institute of Purchasing & Supply. Firms reported their fastest rate of growth in seven months as the Cips index – where a score over 50 signals growth – hit 64, one of the strongest readings since the pre-recession peak of August 2007.
Its chief executive, David Noble, welcomed the resurgence – but he also warned that skills shortages would create a headache. “The sector is struggling to find enough skilled tradesmen to keep pace with new work and the labour market will continue to put pressure on costs,” he said.
The sentiment was echoed by Redrow’s chairman and founder, Steve Morgan, who said that “build cost pressures remain in place”, despite nearly doubling pre-tax profits to a record £132.6m in the year to June. But Mr Morgan – a 40 per cent shareholder and £3m richer after doubling the dividend – had Help to Buy (HTB) to thank for the results, as the initiative accounted for more than a third of homes sold.
He said: “Help to Buy released the huge pent-up demand and it did what the Government set out to do by helping the north and the Midlands, particularly first-time buyers.” The booming housing market has been hit by a slowdown in recent months but Mr Morgan – who also owns Championship team Wolverhampton Wanderers – said it was returning to normality.
The detailed HTB figures also showed signs of a slowdown as speculation over a looming rise in interest rates and tighter restrictions on lending cooled the use of the scheme. The number of homes sold using the mortgage guarantees eased slightly from 4,026 to 3,892 in June, while in July there were 2,662 users of the equity loan scheme, well below the 4,357 seen in June.
First-time buyers accounted for 82 per cent of HTB sales at an average cost £187,800. Areas outside London accounted for 94 per cent of sales.