RICS Claim Help-To-Buy Is Reason
For UK Property Market Recovery
The Royal Institute of Chartered Surveyors (RICS) have stated that the Government’s Help-To-Buy scheme and other financial initiatives have seen the UK property market turn the corner after the post recession slump.
In its monthly report RICS said property prices are up for a fourth consecutive month as the largest number of property buyers in 4 years return to the market.
The RICS report particularly picked out the West Midlands and the North East, as two areas which had suffered more than most in the UK property market crash, but these areas experienced the biggest increase in property buyer activity during July.
The widespread pick-up in the UK property market has seen residential property prices rise at their fastest rate since the peak of the property market in November 2006.
There is a growing chorus that the Government’s Help-To-Buy scheme, which was introduced in April to provide equity loans for first time buyers of up to 20% towards the cost of a new build property worth up to £600,000 (GBP) is creating a new property bubble.
The International Monetary Fund (IMF) have already criticised the scheme, which will be expanded in January to make the loans available to all buyers and all types of property up to the £600,000 (GBP) limit.
The report from RICS also confirms the trend reported by the Council of Mortgage Lenders (CML), who revealed that mortgage lending to first time buyers has hit its largest quarterly total since before the economic downturn in 2008.
The CML said that 25,300 mortgage loans were advanced to first time buyers in June, a 30% increase on the same month last year and quarterly mortgage lending for first time buyers is now at its highest level since 2007.
First time buyers also continue to increase the amount they are borrowing, with the average mortgage loan rising to an average of £117,000 (GBP) in June from £112,500 (GBP) in May.
When lending figures are analysed on a quarterly basis, mortgages advanced to would-be home owners reached a total of 68,200 in the second quarter of the year, the largest quarterly total for five and a half years.
The Government has also declared an end to the five year slump in residential house building, after cheaper borrowing and the Help-To-Buy scheme prompted a 6% increase in the start of work on new residential properties in the 3 months to June.
New residential property construction starts rose to 29,510 in the second quarter of 2013, giving an annual figure of 110,530 residential property construction starts in the 12 months to June 2013, although critics have pointed out that this is less than half of what is actually needed to tackle the UK’s current housing shortage.
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