Steve Lees, Director at smartnewhomes.com - Whether we’ve had an early summer or not weather-wise remains to be seen, but some lucky homeowners will be pleased they are moving in time for the summer holidays.
The recent warm spell is likely to have encouraged many buyers to look to traditional UK seaside towns for inspiration. According to a recent Halifax report prices for property fell in all but four seaside towns between 2007 and 2009. But in Wales they remained relatively resolute, with Colwyn Bay in the north witnessing the biggest jump in prices at 10% and The Mumbles in the south named the most expensive seaside town outside of the South East and South West.
Also according to the Halifax the cost of owning and running a home in the UK has actually dropped by over six per cent in the past two years – great news for homeowners – with this largely due to low interest rates. Average housing costs are now £9,020, equivalent to 27 percent of average earnings, down from 30 percent in 2008. In Wales, the costs are even lower at £7,391, beaten by only the North East and Northern Ireland.
However, today’s homebuyers face a number of challenges, not least obtaining a mortgage in the first place. Recent proposals by the outgoing FSA to look more closely at applicants’ expenditure could make it even more difficult for many homebuyers to get a mortgage and reversing recent trends by the banks to start offering higher LTV mortgages at improved rates.
While it is good to be prudent, lenders should not lose sight of the customer who is perfectly able to repay their mortgage and especially not penalise those buying a brand new home. New build homes are extremely cost-effective, boasting energy efficiency with a variety of features including enhanced insulation, dual flush toilet systems and solar panels, but many developers also offer a host of buyer incentives including shared ownership, Stamp Duty paid and reduced moving in costs.
Recognising this and no doubt frustrated by it, Bovis Homes recently announced that they had teamed up with Barclays to offer a 90 percent loan to value mortgage, helping to make home ownership more affordable for consumers with low deposits. Housebuilders are clearly taking action to address ongoing funding issues and help buyers move up the ladder and it’s likely that more developers will look to offer similar mortgages in the hope of reinvigorating the market.
The smartnewhomes.com demand index, a monthly monitor of all new homes on the website, however points to an underlying problem in that there is a continuing shortage of new homes. June’s data shows that the number of new homes coming onto the website fell to its lowest level since the Index started. Housebuilders have warned of the impending housing shortage and it is now becoming clear just how much of an impact a lack of suitable land, excessive regulations and limited funding are having on the industry.
In spite of this, a number of developers have released positive trading statements for the first half of the year. In the last few weeks Galliford Try reported a 25% increase in new build sales, while Bovis Homes announced that sales were up from 754 in the first six months of 2009 to 803 for the same period this year.
Housebuilders and buyers around the UK will no doubt be encouraged by some recent positive trends. Although I am reluctant to dampen current high spirits, I would, however, suggest that we are not yet safely out of the woods. The government’s austerity measures, proposed changes to housing policy and interest rate rises could impact on the market. Nevertheless, I would expect that developers, who have remained steadfast in their quest to make new homes more affordable, will continue to help give buyers the boost they need to get on the property ladder.
Two swallows don’t make a summer but improved lending and a few more new homes will please a lot more potential homeowners.
See Also: Big Smart Blog (11), New Homes Market (28), Press Releases (371), Property News (6701)
Date Published: 26 July 2010
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