Having recently posted about the Government’s Help to Buy scheme, we started to get curious about the relationship between new homes and second hand property.
We’ve been looking at all the price paid (completions) information available from Land Registry for the Vale of the White Horse from 2010 to the latest figures, which at time of writing were February 2017. We also wanted to see if we could draw any meaningful conclusions to the effect of Help to Buy within the Vale.
We’ve started off just looking at the total completions by calendar year for both new homes and second hand properties.
It would appear that from 2011 to 2015, new homes show a steady increase whereas the second hand properties decline very slightly in 2015 having previously kept pace with the new homes.
Next we look at new homes as a percentage of the total completions for each year.
So looking at the above, there is a steady increase in the percentage of the total completions being new homes. In fact, from 2011 to 2015 it has nearly trebled. Our thoughts are that it probably has more to do with an increase in new homes available in the area, rather than the Help to Buy scheme. Otherwise there would be a greater increase from 2014 onwards.
To explore this deeper, it helps to look at the new properties that qualify for the Help to Buy Equity Loan. The maximum price is set at £600,000, so is the number of new homes under £600,000 completing at a rate higher than across all prices?
It’s clear that sales of new homes under £600,000 have increased more than those over £600,000. Is this down to Help to Buy or is it that the builders are offering more properties under £600,000 so that they qualify for Help to Buy?
It made sense to apply the same £600,000 threshold to the second hand market.
With less of a peak, we’re seeing the gap between the number of properties over and under £600,000 in the second hand market as a more uniform split.
In summary, reviewing the data from 2010 to 2017, there has been a general increase in the number of new homes completing and an increase in new homes completing as a percentage of the total number of completions. The increase in completions under £600,000 is likely to be the twin factors of Help to Buy and new homes supply.