UK housing market finally on the up!

UK housing market finally on the up!

Rate them or slate them, the new government schemes aimed at getting the property market moving again are proving to be working. The demand for housing is the highest since 2009, and the new government Help to Buy scheme is proving to be one of the reasons for this. After the Stamp Duty Holiday there was a lull in the property market for first time buyers, however now that mortgages with a higher loan to value and new government initiatives are more readily available the number of first time buyers is increasing.

Help to Buy Scheme

It is encouraging to see government schemes are having a positive effect on the property market. Help to Buy is aimed to enable people to purchase property with a small deposit (5%) and the government lending the further deposit (20%)  interest free for the first 5 years enabling the buyer to get a lower LTV mortgage (75%) with a lower interest rate and smaller monthly payments compared to if they took out a 95% LTV mortgage. Help to Buy is open to everyone, not just first time buyers; this may be why it is a factor in the rise of property demand. However developers need to be true to their word in delivering more housing so that house prices do not rise too drastically. According to a monthly report carried out by the RICS (Royal Institution of Charter Surveyors) property prices are starting to rise and inquiries from new buyers were at their highest since November 2009.

Funding for Lending Scheme

Another factor which may be responsible for the increase in the housing market is the Funding for Lending Scheme, introduced last August. It was aimed at making borrowing easier for prospective buyers, with mortgage lenders loosening strict mortgage requirements this has helped to reduce mortgage rates. The Funding for Lending scheme was designed to enable was designed to enable greater availability of funds to lenders at a lower cost and proves to be paying off. With lenders more confident in their credit supplies they are more openly providing borrowers with mortgages and supporting first time buyers. In conjunction with each other these schemes have had a positive effect on housing market activity and it is showing signs of further growth.

The Concerns

All this being said there are also some issues which may arise. House prices are gradually being pushed up, however this makes property which has been unaffordable even more unaffordable to buyers. Within our economy earnings are still showing very low signs of growth. With a demand for property and developers under pressure to deliver it is inevitable that property prices will rise.

The property market is still a favourable place to those looking to buy their first home. According to the Council for Mortgage Lenders more borrowers are taking out higher loan-to-value mortgages than any other time over the last four years. At first people were dubious about the success of these government schemes but from all the evidence they are only proving to be of help.