George Osborne’s decision to extend the Help to Buy equity loan scheme until 2020 will certainly cement recovery in the housing sector and provide the impetus needed to push forward previously mothballed building sites.
The original Help to Buy scheme played a major part in this resurgence and developers will be reassured to know they can rely on the housing market being supported for six more years – rather than facing cut-off in 2016.
Purchaser demand levels are clearly on the up - evidenced by the sale of housing development sites which failed to sell or were withdrawn from the market in the depths of the downturn.
This has meant that sites are now attracting strong interest with both the numbers and levels of offers noticeably improved from only 12 months ago.
But before we get too carried away we must ask ourselves to what extent the housing recovery has been underpinned by a background of better economic news and improved consumer confidence.
There may be some doubt as to whether this really is a sustainable position given enduring high house price to earnings ratios and the patchy national housing market recovery.
Just how long can the better performing locations including our South West regional hotspots such as Bath and parts of Bristol, continue to diverge from other parts of the country before economic and market elastic begins to pull them back together again?
If budget steps to boost the national economy as a whole are unsuccessful we can foresee even the better performing areas of the housing market being compromised by ‘macro-economic drag’.
With the exception perhaps of parts of London which has its own peculiar property dynamics, the property market does not operate in a national vacuum – despite initiatives such as Help to Buy.
The last 12 months’ activity may not be 100 per cent bubble - after all house prices are still around 10 per cent below the peak in the South West, 13 per cent below the peak in the UK as a whole and in real terms the UK market is still almost 30 per cent down on peak.
However, it is our view that the housing market will require something more deep seated than targeted initiatives such as Help to Buy if we are talking in terms of long term and sustainable recovery.