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London property market blog


/ by In house team

Help to Buy – was it responsible for an overheated market?

The Help to Buy scheme has been accused of many things, including being responsible for a London property bubble and rapidly rising prices. But the facts are that the Government implemented scheme hasn’t really had too much of an effect on the market as the number of sales made using it at just 27,861, equals less than 3% of the total transactions made since the launch of Help to Buy 13 months ago. Of the purchases made, 85% have been to first time buyers and only 5% of the total Help to Buy sales have been made in London.

Indeed these figures echo the activity seen within our London branches as an internal review of the take up of the Help to Buy scheme among our sales branches reveals that while we’ve had some interest among registered purchasers, no properties have been purchased in any of our offices using Help to Buy. Interest among buyers appears to have been most active in the less expensive areas of South West and South East London, such as Tooting, Streatham, Forest Hill and Crystal Palace which would typically be expected as these are areas popular among first time buyers.  Interestingly, since the launch of Help to Buy phase 2, many other banks and building societies have brought out 95% mortgages, some of which can be more competitive than the Government backed scheme in terms of the interest rate offered.

So while take up has been fairly low since its launch in April 2013, the scheme’s effect on buyer confidence has been noted. On its own, it wouldn’t have had much of an effect, but when combined with a variety of factors including relaxed mortgage lending, a shortage of stock and a slowly improving economy, the unique mix has resulted in an extremely positive perception among buyers and sellers which has trickled down into the sales market. Land Registry information just released shows that there was a 19% increase in the volume of sales nationwide when comparing 2013 with 2012.  Their figures also show that in January and February of this year, those figures rose to a 48% and 38% increase year on year respectively. Average house prices in London meanwhile are shown to have risen by 17% year on year, reinforcing the perception of confidence in the market among buyers and sellers.

Over the last few weeks however, we have seen the heady highs of previous months begin to stabilise, with more normal market conditions being seen across the Capital. The number of buyers are starting to level out while the number of homes coming onto the market is increasing. Activity is however still very high with many buyers who have so far been unable to purchase coming back into the market as it corrects itself.

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In house team London Property Market

As the marketing and communications team at Kinleigh Folkard & Hayward's head office, our aim is to keep you updated and informed where the London property market is concerned. In addition, we'll bring you tips on navigating current issues and trends in the market when buying, selling, letting and renting to ensure that whatever field you're interested in, you'll be completely informed.

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