Signs of buoyancy in the UK housing market 2012
The first three months of 2012 have provided some strong indications of buoyancy in the housing market this year. This is in spite of recent negative factors such as the reintroduction of the 1% stamp duty rate for first time buyers purchasing properties in the region of £125,000 – £250,000.
House purchases over the last few months have been at their highest rate for the same period over the last five years, with a rise of 14% from February 2011 to February 2012. The Council of Mortgage Lenders reported the level of gross mortgage lending at £10.7bn.
The government has recently created a new incentive scheme for first time buyers to run alongside its established NewBuy scheme.
The FirstBuy scheme
The FirstBuy scheme launched in March 2012 and is expected to assist more than 10,000 first time buyers over the next two years. The scheme currently involves a partnership between the government and over one hundred housebuilders, where together a 20% equity loan is offered which alongside a 5% deposit from the buyer enable mortgage loans of 75% to be taken out. The loans are repaid on the resale of the property, with the government share being made available for reinvestment in more affordable housing.
However, the scheme has failed to encourage activity so far, with mortgage broker Chris McConnachie describing the response from lenders as ‘Disappointing’.
‘We would have expected the high street lenders to get behind this government scheme. However up to this point there has been very little in the way of positive response.’
Overall the signs are still positive for 2012, with the coming summer months expected to provide the usual seasonal increase in activity in the housing market. Mortgage advisors report that there is currently a large population of prospective buyers and that anyone looking to sell their property should seriously consider getting it sale ready and on the market in the next few months.