The latest phase of the Government’s flagship Help to Buy scheme launched this month looks likely to inject further activity into the hous ing market as lenders offer state-backed mortgages to aspiring first-time buyers and home movers with deposits as low as five per cent.
Lenders representing the majority of the mortgage market have now come on board the scheme, although only state-backed lenders Royal Bank of Scotland (RBS), NatWest, Halifax and Bank of Scotland have unveiled their products under the initiative so far.
In a sign that house prices could push up further amid surging buyer demand, the shortage of homes for sale continued in October as the number of new properties listed dropped by 1.6 per cent, while the number of new buyers registering with agents rose by 2.0 per cent.
But the time that homes are spending on the market also rose slightly during the month, from just under eight weeks in September. Hometrack said this indicates that buyers are becoming more “price sensitive”.
They suggested that some might have become influenced by concerns that the country could be heading for a house price “bubble”, with people over-stretching themselves.
Richard Donnell, director of research at Hometrack, said that a “chronic lack of supply” has been driving house price growth.
He said: “Growth in new sales being agreed is running at 4-5 per cent per month and this is continually eroding the stock of homes for sale.
“In contrast, levels of demand have grown by 3% in the last two months.
“Improving confidence among buyers has been fuelled by low mortgage rates and positive news on a recovering housing market.”
Mr Donnell said that as sellers’ expectations increase, they are likely to ramp their asking prices up further.
But questioning how far buyers will want to go to meet these higher prices, he continued: “Longer sales periods are likely to be a combination of reducing quality in the stock of homes for sale and increasing buyer sensitivity in the face of strong price rises and the debate over a housing bubble.
“Talk of a national housing bubble is overdone, but any weakening in demand, against the backdrop of tight supply, will result in a slowdown of price growth.”
Housing Minister Kris Hopkins said: “We’re determined to pull out all the stops to both get Britain building and support aspiring home-owners who work hard and want to get on the property ladder.
“That’s why we’ve already helped deliver over 330,000 new homes since 2010 while our plans to continue investing billions in our affordable homes programme will lead to the fastest rate of affordable housebuilding for two decades. Because the Help to Buy: Equity Loan scheme is helping demand with 15,000 reservations of newly-built homes in its first six months alone, leading house-builders are reporting plans to increase their building rates in response.”