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Posted: 07.04.14

New build prices drop in reaction to 'Help to Buy'

New build prices drop in reaction to 'Help to Buy'

Figures released by the Mortgage Advice Bureau suggest that the emergence of the ‘Help To Buy’ loan scheme has resulted in slower growth for new build house prices.

Average price inflation has slowed from 4% to 2% during the past year, but is even more pronounced in regions of the UK where they have been more than 1,500 Help To Buy loan completions.

These statistics suggest that Help To Buy is increasing supply because loan applicants are tending to opt for entry-level homes, without fuelling competition elsewhere in the market.

By boosting access, first-time buyers can get more for their money, or enable them to set aside cash for home improvements such as decking.

“These findings show what good sense it makes to extend the Help to Buy equity loan scheme until the end of the decade. Buyers are taking advantage of government help to make entry-level purchases rather than chasing properties at the top end of the market,” explains Andy Frankish, new homes director at Mortgage Advice Bureau.

“The scheme’s arrival has also worked wonders to keep the costs of buying a new build home down. Improving the supply of housing is having an immediate and powerful effect on house prices by keeping inflation in check and avoiding a scenario where aspiring owners are priced out of the market.”