There were 4,628 HTB1 house completions in Q1 2015 which was the slowest quarter for completions since Q3 2013, the first full quarter for completions under the scheme.
Compared to the same quarter in 2014, HTB1 completions declined by 17% from 5,581 in Q1 2014 to 4,628 in Q1 2015. A greater concern, however, is the significant 43% drop from 8,166 completions in Q4 2014 to just 4,628 in Q1 2015.
Decline comes as private housing completions are rising
Beside this worrying trend, the DCLG statistics also show that private enterprise completions are rising overall. In Q1 2015, there were 25,970 private enterprise housing completions which is 14% higher than the same quarter a year earlier (22,710). This was also a quarterly increase of 7% from 24,260 in Q4 2014.
As a result, equity loan completions in the first quarter of this year accounted for 18% of total private enterprise completions, down from 25% in Q1 of the previous year.
This decline was even more visible from Q4 2014 to Q1 2015 where the percentage of private enterprise completions through HTB1 dropped from 34% to 18%. This further highlights the declining role of HTB1 in private housebuilding and suggests greater use of HTB1 could help to grow the housing stock at a faster rate.
HTB1 continues to reach its target audience
Despite the fall in HTB1 activity, Mortgage Advice Bureau’s own data shows the scheme is continuing to reaches its target audience and help them access the market.
According to its National Mortgage Index which is compiled using data from more than 600 brokers and 900 estate agents, the average HTB1 customer in April was 31.9 years old, which is 5.5 years younger than the average homebuyer across the whole market. They also earn 11.5% less than the market average, with an average salary of £33,441 compared with the market average of £37,767.
Andy Frankish, New Homes Director at Mortgage Advice Bureau, commented: “The Help to Buy equity loan has been a great success for helping first-time buyers and those with lower incomes get onto the housing ladder. The drop in completions over the last few months at a time when total house building is on the up suggests lenders are putting their weight behind new builds without needing the government incentive. It is certainly positive for the economy that house builders no longer look quite so dependent on Help to Buy to grow the housing stock.
All the same, it begs the question: would house building rise faster if more can be done through Help to Buy? If the scheme was being used to its full capability with better promotion of the scheme on a national level, it would not only help those still struggling to access the housing market but provide a much needed push for house building which is still a great concern and a long way off target.”
