House prices in almost half (46%) of England will be too expensive for first time buyers to purchase a property through the Help to Buy ISA by spring 2017, according to the latest research by eMoov.co.uk.
eMoov has analysed the average house prices across all 326 districts in England and identified which areas exceed the £250,000 threshold outside of London and £450,000 inside the capital – the maximum property values eligible for Help to Buy ISA homebuyers. eMoov also highlighted the locations where house prices could exceed the threshold by March 2017.
Although the online estate agent did analyse figures for both Scotland and Wales, it found that the average house prices across the entirety of both countries remains within the £250,000 threshold, and should continue to do so until at least spring next year.
When the Help to Buy ISA was introduced in December last year, there were already 101 districts in England that were out of reach – 17 London boroughs and 84 districts across the rest of the country.
In the eight months from December to July, the average house prices in a further 28 areas exceeded the thresholds – 26 outside of London and two within the capital.
Two of these areas recorded double-digit growth since December, with prices up by over £25,000 in just eight months. Stevenage saw the greatest jump in property values, of 12%, taking the average house price to £272,777 from £243,988. House prices in St Edmundsbury soared by 10%, bringing the average value up to £270,364 from £245,167.
Over the same period, two London boroughs have become out of reach for Help to Buy homebuyers. House prices in Tower Hamlets jumped by 5%, taking the average value to £468,484. In Harrow, where prices grew by 4%, the average house price is now £451,643.
As well as highlighting the areas that are currently out of reach, eMoov took the average increase in house prices for each area between December and July and applied it to the current property value, finding out which locations will become ineligible by spring next year.
Assuming a similar rate of house price growth, eMoov found a further 21 districts in England – five of which are London boroughs – that could break through the Help to Buy thresholds.
This would mean that the average house prices in 150 districts (46%) in England would be too expensive for Help to Buy homebuyers by March 2017.
Commenting on the findings, the founder and CEO of eMoov, Russell Quirk, says: “Historically, Help to Buy has been of little help to the nation’s aspiring homeowners and it’s plain to see why when you look at the numbers. Although you must at least appreciate the Government’s attempt at introducing a leg-up through the ISA, the current pace of price growth across the market in England means that it will soon become irrelevant to the average buyer across nearly half of the country.
“The figures suggest that by March of next year, for those looking for Government help to buy in London in particular, just nine of the capital’s 32 boroughs will be a viable option.”
He continues: “Across England, there are still plenty of areas available below £250,000, however, if you do need help to get on the ladder but would prefer to choose where you live rather than have it dictated by the Government, the only option is to look further north or across the borders to Wales and Scotland.”
The news follows the shocking Help to Buy ISA scandal that was revealed last month: https://landlordnews.co.uk/help-to-buy-isa-scandal/
Although the findings will come as bad news to aspiring first time buyers, landlords will be pleased to learn that rental demand shows no sign of slowing down. With many young people still priced out of homeownership, buy-to-let investment looks to remain lucrative.
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