The premium first-time buyers are paying for a Help to Buy property has risen further.
Analysis by conveyancing comparison website Reallymoving has found that first-time buyers using Help to Buy are now paying 12% more than those buying new builds without the scheme.
The data – based on 44,000 quote requests by users on the Reallymoving website – found the premium was up from 8% last October.
The website found those using Help to Buy paid on average £303,000 in February 2019 compared with £270,000 paid by those buying independently.
Its figures also showed that first-time buyers in January and February accounted for 57% of all home buyer activity, the highest level recorded, while almost one in five (18%) first-time buyers are now choosing a new-build home over a secondhand home.
Rob Houghton, chief executive of Reallymoving, said: “Help to Buy is indeed helping first-time buyers get on to the housing ladder, but these figures suggest that they may be paying more than the property is worth in order to get the help they need to raise a deposit.
“This could be either because developers are charging a premium or because first-time buyers are encouraged to buy a more expensive property because the scheme gives them greater spending power.
“Either way, when they come to sell, they may find their property is worth less than they paid for it, made worse by the fact they could be competing with other new developments nearby that are available with Help to Buy, while their own property is no longer ‘new’ and therefore ineligible for the scheme.
“I urge those using Help to Buy to consider how long they intend to hold the property, whether they can afford the loan repayments on top of their mortgage when the five-year interest-free period comes to an end and how easy it will be to resell.
“Meanwhile, housebuilder financial results speak for themselves, with Persimmon last month announcing profits of over £1 billion, or £66,000 per home sold.”
Source: Property Eye