Figures released by the Halifax today suggest that new build properties have increased in price by 12% in the last five years, now costing on average almost £234,000.
In contrast Halifax’s house price index suggests the average overall price in January ’08 was £191,000 compared to £162,000 at the end of 2012 – a drop of around 15%. So it would appear new builds have been significantly outperforming the general market.
This may not be a huge surprise to those who’ve observed the plethora of government initiatives to support new build properties in recent years (HomeBuy, NewBuy, FirstBuy, GoodnessKnowsWhatBuy . . .). Now, one of the key justifications for focussing on new build is supposedly to persuade builders to do more building, but interestingly the latest figures on new build completions (to Q2 2012) suggest these incentives have done little to boost the number of properties actually being built.
So arguably the Halifax figures suggest private developers have been building about the same amount, and using the mortgage support schemes – along with the general lack of housing - to jack the prices up.
It’s timely information with the launch of the latest Help To Buy equity loan scheme at the start of April (again pushing new build) and the mortgage guarantee scheme due to launch next January, which will support purchases of any property. Critics of the scheme – who argue the government’s support will do little to enable more buyers but instead enable those selling to increase their prices – will likely point to this latest information with a resounding “told you so”.