More needs to be done to significantly increase the supply of much-needed new build homes in order to help more first-time buyers get a foot on the the housing ladder and ensure rents remain affordable, according to Richard Donnell, executive director at Zoopla.
He believes that increasing housing supply would be far more beneficial than simply introducing mortgages with very long-term fixed interest rates and mortgage guarantees that enable deposits as small as 1% with competitive rates.
The possible re-introduction of Help to Buy lurks in the background while there is also some scope to further reduce stamp duty costs for first-time buyers.
But Donnell believes there are major obstacles to some of the these proposed schemes, and that the solution to helping more first-time buyers is to do more to encourage housebuilding across the country.
“There are also challenges with proposed small deposit mortgages which would be enabled by an insurance guarantee. A definite positive is that they get around the deposit challenge for first-time buyers – however, this is only part of the problem as affordability testing will still likely apply, even with an insurance policy to protect the bank from house price falls.
“In London for example, a household income of over £150,00 would be needed to afford a London home with a 5% and pass the affordability test. As it stands, building more homes for sale and rent is the best solution to keep prices and rents in check. This in itself helps first-time buyers save for a deposit while improving the choice for all.”
Property industry reacts to Zoopla House Price Index
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