The head of the UK’s biggest building materials supplier, Travis Perkins, has told international news agency Reuters, that the UK will manage to avoid a housing market bubble caused by the government’s controversial “Help to Buy” scheme, because supply will eventually catch up with demand.
The debate over the government’s “Help to Buy” scheme has been rumbling steadily on, since it was brought forward over a month ago at the Tory conference in Manchester.
It was brought forward 3 months earlier than anticipated, by Prime Minister David Cameron in a bid to help first-time buyers get a foot on the property ladder. Critics of the scheme accused the government of creating an unsustainable boom in house prices, particuarly in London and the South East, an accusation which Mr. Cameron has flatly rejected.
The Labour Party criticised the policy, saying that the answer to the housing crisis lay in building more homes. Shadow Chancellor, Ed Balls, told the BBC at the time that unless the government built “more affordable homes, as Labour has urged, then soaring prices risk making it even harder for first time buyers to get on the housing ladder.”
There’s been a lot of to-ing and fro-ing in this debate, with many economists coming down on the side of the Conservatives. We recently published a blog on comments made by leading economist Peter Spencer, who argued that the government’s scheme “was well-timed and targeted,” and that chances of a housing bubble were “extremely slim.”
Now it seems, however, that a leading figure in the British construction industry has thrown his weight behind “Help To Buy.” In an interview with the international news agency Reuters, the chief executive of Travis Perkins, Geoff Cooper, claimed that the UK stands little risk of a housing bubble.
He told Reuters, as long as “there’s people wanting to sell and move as well as buy and move then the market is helped to be in equilibrium.”
Far from the “Help to Buy” scheme meaning an end to the building of house, Mr. Cooper points to an increase of over 100,000 new builds in the UK during 2013, a increase of about 20% from last year, whilst there will be a further 1 million house transactions.
Mr. Cooper’s comments come at a time where the deputy governor of the Bank of England has defended the “Help to Buy” programme. Last Tuesday, Charlie Bean, revealed that if “Help to Buy” sent house prices up, instead of increasing supply, then government would be able to raise fees charged to mortgage lenders.
Mr. Cooper believes that these checks and balances mean that the housing market will never fully be out of control. Once the housing market returned to normal, then the requirement for “Help to Buy” would lessen and the scheme could be spread to other parts of the country and the cap of £600,000 could be reduced.
It’s been quite a good year all ready for Travis Perkins, and Mr. Cooper forecast “year on year” growth for the building materials trade market, both in the commercial building materials market and also the ‘do-it-yourself’ market. And as more and more of us look to build more energy saving buildings, Travis Perkins definitely sees some potential in providing materials for these buildings.
What do you think about “Help to Buy”? Do you think it will create a housing bubble? Should we concentrate on building more houses? Or is it a great way for first time buyers to get themselves on the property ladder?
Let us know! Tweet and Facebook us! And don’t forget, if you’ve recently bought a house and want a full building survey completed on the property, then make sure you give us a call on 0151 486 3437.