The Home Builders Federation (HBF) have sent a letter to the Office for Budget Responsibility (OBR), warning that urgent action is needed to meet the 1.5m housing target
As first reported in The Times, the letter states that in order to hit the 1.5m housing target, support for first-time buyers is desperately needed.
The letter comes alongside the OBR downgrading UK productivity forecasts by £21bn as it is expected that the chancellor will raise taxes in the next budget.
Bringing more doubt to the industry
The HBF’s letter will increase the doubt in the OBR, and could even cause another downturn in their forecast, due to the construction industry’s concern in their own ability to achieve targets without the right support.
Help for first-time buyers may be the only option, according to the HBF, to increase demand for homes and minimise tax raises on new homes to make housebuilding more profitable.
Writing for PBC Today earlier this month, Emma Ramell, director of external affairs at HBF, discussed why first-time buyer support is crucial for housebuilding, and it must be addressed in the Autumn Budget.
Emma wrote: “The latest data from the Office for National Statistics, published in September, paints a bleak picture. In London, the average property is now unaffordable even to households in the top 10% of earners. Across the South East, South West and East of England, only those in the highest income decile can afford the average home.
“Unsurprisingly, without a realistic market for new homes, investment in new sites and labour is being limited. To overcome these challenges, the Government could provide assistance for first-time buyers at the Budget in the form of a new equity loan scheme part-funded by home builders.
“Not only would this generate positive outcomes for housing supply, home ownership and the wider economy by transforming demand into effective demand for new homes, but it would also give builders the confidence to invest for the long-term.”
Without support, prices for first-time buyers are too high
In May, the UK house price index received an update, revealing that the average price for first-time buyers hit a whopping £250,000, increasing by 7.7% in just one year.
Overall, house prices saw a rise of 1.1% in all areas, and an annual rise of 6.4%, making the average property value £271,000. This puts the average first-time buyer price at just £21,000 below the general average.
Coupled with stagnating wages, fewer and fewer people can buy their first home, making homes more difficult to sell in general. This impacts profits for developers, housebuilders, and leaves fewer funds for more developments.
The lack of income from these sites will also make it more difficult to train new staff, exacerbating the skills crisis.
Another industry leading voice calling for support for first-time buyers, the National Federation of Builders chief executive, Richard Beresford, said: ““First time buyer lending schemes are absolutely vital to buyers and builders, but without a huge increase in supply, there is a risk that buyers overpay for homes. This is why Labour’s commitment to 300,000 homes a year is so important.
“Demand led policies that are unsupported by supply strategies create unintended consequences, such as fuelling house price rises and risking negative equity on certain home types, like apartments, because premiums were paid to get on the housing ladder rather than to purchase the appropriate homes.”
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