NewBuy … costs 25% more per week than renting
Hometrack’s latest paper “Market forces shape new housing supply” examines the latest trends in new private housing supply, emerging risks and opportunities, the profile of private starts by geography and the impact ongoing Government support for the sector.
The findings of this paper are that over the last three years new starts have been increasingly from new houses rather than flats, with “three or four bed houses now account(ing) for two thirds of all starts and the number of new two bed houses has surpassed the number of two bed flats being built”.
In regards to the recovery of starts around the country there is “a strong correlation between increased starts and the extent of the recovery in residential values” with only W and NW London bucking the trend with rises above the peak levels of 2007 for both volumes and prices. Throughout the rest of the country although the volume of new starts has grown it is still “less than half that seen at the peak”. Although in southern England there has been a shift in the supply/demand balance resulting in that “today one in every three new homes being built is a house in southern England.” As the paper goes on to stipulate that although building in the south of England may appear to be of a low-risk developers need to be aware of the potential for “growing concentration of similar types of new supply in localised markets” and perhaps “wary of local competition and its potential impact on sales rates and net selling prices”. Opportunities further afield need to be examined as they may prove to be not as risky.
Another interesting find for the lettings market is that although the Government has been introducing initiatives to boost the housing market, the NewBuy scheme with its mortgage rate at “around 5% are higher than the average rate on a typical new mortgage (3.5%).” The result of this is that throughout the country for an average two bed new build property the “NewBuy … costs 25% more per week than renting”.
Read the full Paper at Hometrack