New research from the House Builders Federation has shown that the affordability of the Government's Help to Buy scheme combined with the energy efficiency and cheaper running costs of new build homes are leading to more and more first-time buyers taking the new build route into home ownership.
The divergence over the past two decades between house prices and incomes, coupled with tighter lending to first-time buyers, has seen fewer young people get on the housing ladder.
But a new generation of first-time buyers are seeing new build homes, for which the Help to Buy scheme is widely available, as the answer to their housing affordability problem. The scheme allows purchasers to buy with just a 5% deposit, but can also mean dramatic reductions in their monthly outgoings.
Around 160,000 new homes have now been purchased using the scheme, 81% whom are first time buyers, paying on average £235k for their home (non London based buyers). This deposit of under £12,000 for a brand new home compares favourably with the average first-time buyer needing to find a 16% deposit.
The scheme, whereby the Government funds a 20% equity stake, reduces a buyer's monthly mortgage payments by around £350 for someone buying the average priced new home through the scheme
In addition, research shows that new build homes are much more energy efficient to run than second hand homes, saving buyers on average an additional £53 a month. Taken together these savings amount to almost £5,000 over the course of a year.
And the savings don't end there. With the average second hand buyer estimated to spend up to £45k upgrading their property, new homes, with their brand new bathrooms, kitchens and fixtures and fittings throughout, provide their buyers with considerable savings to their short and long term budgets.
Stewart Baseley, executive chairman of the Home Builders Federation said; “Getting on to the property ladder is proving considerably more challenging for today's younger people than it was for their predecessors. Deposit requirements have increased as have house prices generally, outstripping earnings and making home ownership nothing but a dream for many. New build homes are proving to be the solution for hard-pressed households with an ambition to move into home ownership.
Over a quarter of a million people are now living in new build homes purchased using the Help to Buy scheme, the vast majority of whom are first time buyers. Help to Buy purchasers are reaping the benefits of smaller deposit requirements, lower monthly mortgage payments and cheaper home running costs provided by today's more energy efficient new build homes.”