The budget today 23rd March introduces a shared equity style scheme for first time buyers to get help with an interest free deposit from the government when they buy a new build.
I think this is an appalling idea for several reasons:
1. It does nothing to address the fact that people are priced out of the housing market. The average wage is about £23k in the UK, yet the average house price is £164k. That’s many times the income – and many more than the 3.5X income that is a historical figure in the pre-housing boom days.
2. It encourages more debt.
3. It means the government is helping builders not first time buyers. If builders have to put in a percentage themselves, then they will surely just price their houses more to start with.
4. It will not help those not on the scheme and make things harder. If house prices weren’t being propped up then they would fall making housing more affordable for all.
5. It’s a very limited scheme. First time buyers only.
6. It’s a very limited scheme. New build only.
7. Older properties will not be included – which means there’s no influx of FTB into the housing chain anywhere. This means existing property may struggle to sell more.
8. Once a builder can sell a house under this scheme it prices all their properties at this higher rate. This makes it worse for anyone else interested in a new build.
Builders shares rose after this announcement. It is only good for builders.