Help To Buy Reasearch

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Help To Buy presentation by Acritas.

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  • Attitudes reflect current tenure (e.g. Owners more positive about buying than renters; renters more positive about renting, also younger) and life stage (e.g. Younger more likely to see buying as an important part of future financial planning – but they (and renters) are also more likely to consider pricing too uncertain to consider buying)
  • 18-24 25-34 35-44 45-54 55-64 25%29%23% 11% 7% want to get a home with a mortgage/ remortgage
  • And anecdotally the bank of Mum & Dad is/ has been crucial in helping younger people get a mortgage deposit togetherNumber of first time buyers up – ‘The number of first-time buyers rose to its highest level since 2007 in May, according to the Council of Mortgage Lenders, after banks and building societies became more willing to offer loans to borrowers with small deposits.A total of 25,100 loans were granted to newcomers to the property market during the month, a 29% increase on April's figure and up by 42% on May 2012, the CML said.It was the highest monthly figure recorded since November 2007, shortly after the property market peaked and house prices started to fall, and a marked contrast to the 8,500 loans granted in January 2009.’ Guardian 12th July 2013Home ownership peaked 69% in 2001, fell t0 64% in 2011 and expected to have fallen further since then http://www.guardian.co.uk/money/2013/jun/28/new-class-landlords-profiting-generation-rent. Social renting down from 31% in 1981, private renting up from 11% in 1981– both 18% in 2011. Private renting up from 10% in2008 (crash) to 15% in 2011 and i same time the proportion owning a home with a mortgage fell from 40% to 35%. (ONS) http://www.bbc.co.uk/news/uk-21697044. Unaffordable rents - Resolution Foundation ‘The report, Home Truths, found that in 125 of Britain's 376 local authorities, a couple with a net income of £22,000 a year and one child would have to spend more than 35% of their income to rent the least expensive two-bedroom property, making it unaffordable to live there. In 10% of local authorities rent would soak up more than half the family income after tax.. In 2012, the Joseph Rowntree Foundation calculated that a family with one child needed £19,510 after housing and childcare costs to have enough money for basic necessities..’ http://www.guardian.co.uk/money/2013/jul/15/private-rents-price-out-poorer-families 160713Most stats from Savills’ A demand for residential development land, 14 May 2013Rent levels http://www.independent.co.uk/property/rising-rents-price-poorer-working-families-out-of-a-third-of-britain-8708938.htmlReservations stats = FT http://www.ft.com/cms/s/892bf0bc-b897-11e2-a6ae-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F892bf0bc-b897-11e2-a6ae-00144feabdc0.html&_i_referer=#axzz2YT0qQRPl-
  • From 2007, builders attempted to overcome restrictions on lending by offering shared equity schemes
  • High property prices – esp younger and C1 C2, also Scotland, NW, Wales & SELack deposit – esp younger, E Mids and Wales , less NE, W Mids, Eastern and SWAlso qualifying esp 35-44 yr oldsLack mortgage availability - esp 18-24Lack property esp AB, W Mids, SE least for WalesFalling value – less for 18-24 and NE & Wales, more for NW, W MidsNo barriers – least for younger & NW, more for NE
  • Lack deposit differences drop outPrices more of a major issue for rentersQualifying major issue esp for private rentersLack property more issue for ownersHome value falling an issue for mortgageesNo barriers for owners up, but drop for renters
  • Perceived impact on ability to secure a mortgage greatest amongst lower social grades
  • Better than NewBuy: "I think it's very important as it enables consumers to buy where they previously couldn't but the reason why its a better scheme is two fold - one is that it is less constricted by a lot of the rules that were put in place on previous schemes, the value of the purchase is probably the most important one but that is now set at £600K, so that cap means an awful lot of the product we build qualifies." secondly is the point that housebuilders now doesn't have to share in the funding of the schemes - its not on their balance sheet "and this is why this scheme has got off to a much stronger start than previous schemes - its not constrained in the same way." AnonBetter than NewBuy: Because HCA cut their teeth on the First Buy schemes they were quite well honed for HtB. When we registered online for HtB we had an option where you could request a fast approval process which we did and they turned it around quicker than the normal time frame which was welcome. Anon (NB NewBuy was ‘tortuous’)"Help to Buy is fantastic as it stimulated growth but realistically it can't go on stimulating it.“ AnonThinks it is a well designed product "and the reason that we're able to use it a lot more than previous schemes is that when we sell a house, under previous schemes we would have had to put a share of the equity on our own balance sheet, under this scheme we don't need to do that - so basically the government is taking the 20% - previously we were sharing it so there was a natural inclination for the housebuilder to limit the use of those schemes because the basic model of the house builder is not to buy land, build a house on it and then keep some of it on your balance sheet." AnonYes, I think so, because it is recognising the fact it is not just first time buyers who are affected by the issue. It is about being able to immediately provide enough equity to push into purchasing a new home for those who are quite able to sustain the mortgage over time. That was sensible. Clearly they have looked at ways to support the market as broadly as possible. Over time there has been a recognition that the issues affecting the housing market activity have been wider than first time buyers. If you can find a way of supporting the market more generally, that has the right bounds, then that is sensible to look at... [If we were looking at any potential drawbacks, or negatives of the equity part on the broader property market, have you any thoughts here? There are obviously discussions in the media, perhaps for example that it could lead to artificial stimulation of the market, a kind of boom and bust bubble.] We don’t see that with the equity loan scheme as it is specifically for new builds. It will always translate into additional sales and companies will always respond to that and build more units than they would have done otherwise to meet the demand. If you look at the market as a whole then new build is only something like 10% of total sales transactions so it is fairly unlikely there would be any overall impact on house prices. The fact that in the new build sector there will be a build response to the attractiveness to the scheme will also be a safeguard against that being a worry John SlaughterDirector of External AffairsHBF‘The fundamentals of HTB are good for housebuilders, but not for taxpayers. Spending [the HTB spend] £xbn on infrastructure such as affordable homes, potholes, rail etc. would improve demand, but HTB is designed to build people's confidence in the run up to the 2015 election. So wider industry has been suppressed by this Government action. Shared equity was already offered by housebuilders, but HTB has reduced the amount housebuilders have to hold as stock, so the whole mortgage market is now more liquid. However the downside of HTB is that house prices will go up as a consequence and there is fear of what will happen when HTB stops. Currently there are not enough lenders supporting HTB mortgages because the lenders find HTB slightly unusual and some lenders feel that it's not enough to sway the balance between the strengths of the customer to repay the loan and the value of the loan.’ John Anderson Kier Group"So its certainly a fantastic initiative that has been put in place and one that we're taking full advantage of " Main benefits are whether you're a 1st or 2nd time buyer "you have access to secure a property with just a 5% deposit." Also benefits a substantial number of people over NB or the MGS - is because it does 2 things - it reduces the amount of loan you require, then, because it is so popular and well received by the lenders, then it actually reduces the interest rates on it . so whether you go with NB or the EL scheme, - you take a 75% mortgage out, which is a lot lower and also you're paying nearly 2% lower on interest rates "so in affordability it's a massive advantage." Kevin BelshamDirector of Sales and MarketingTaylor WimpeyThe Government is only going to have to part with cash if there is an intervention / possession and they have to make up the difference. So that scheme will probably last a number of years. Help to Buy won’t be sustainable from a treasury point of view after the first 3 years. It’s not just about the Government, the banks have to take on responsibilities with regards to rates. They are making decisions about the size of their mortgage book and too much risk averse lending happening. Need to find a happier medium. Graham Cope , RedrowNo, the timing and scale are wrong - there were shared equity schemes before, but these were restricted - e.g. The type of buyer, the number of bedrooms, .. It was a more affordable scale. John AndersonMD Kier Homes
  • John Slaughter, HBF
  • Nb any differences by geog, tenure, demogs
  • And HTB are equally likely to think getting a mortgage has become more difficult since the crash
  • “We should get more normalisation, standard 90-95% mortgages coming back at more favourable rates. That would be a reasonable point to stop these schemes....” Anon “A much higher than normal seasonal sales rate. I am convinced when you look at the sales, this has been driven by the HtB introduction.” Anon
  • So, given these constraints, is there a bubble coming? .....
  • So don’t foresee the house price bubble and bust if limited to new builds only (as they account for 10% of market) and because the market was so depressed before. “ As a trade association, what we will be looking to do is discuss a sensible way in which we can work through the scheme to maturity and what lies beyond that with Government. It would be premature to say any one has a specific answer to that, but we are very clear that it would be sensible from the point of view of all parties that you know how you want to unwind these schemes when they reach the end of their life. We need a better understanding in practice of how the mortgage market generally is evolving and maturing as we go through that period. The reason these measures have been looked at is because we were facing a very difficult financial situation it has taken a long time for the mortgage and financial market to recover from. There is a lot to factor in to how one would look at the world in 3-4 years time and I think we can’t pretend to have all the answers at the moment, but we are clear on the kind of conversations that all parties will need to have to ensure the schemes produce benefit now, and also lead to the right business climate for the future.” John SlaughterDirector of External AffairsHBF
  • Targets seen as ambitious by some buildersMost builders & experts expect targets to be met But other builders do not know yet as it is too early to tell, despite a strong start“The banks have to change their attitude to lending." Anon“The banking side could be improved. I think the banks in some cases are in some cases reluctant, or not very clear about their product.” ...[Are we talking major lenders, or smaller regional ones?] No it is the major lenders. “The banks generally have not been great at supporting innovative mortgage products. They are getting better, and helped us better than say New Buy and First Buy. I think the banks need to be more engaged in the process.” Anon
  • Scope narrowing - e.g.: Properties with a top value of £300k, rather than £600kFirst and second time buyers only Geographical limitsDon’t know if its life expectancy is right or not – too soon to tell
  • A higher proportion of current homeowners, ABs and over 55 year olds are aware of HTB – is it being appropriately targeted?But only a third of those who have heard of ‘Help to Buy’ think it will help them to buy a property:Least help to those with highest awarenessBut those who may be in greatest need (younger, renters, C1, DE) appear more likely to think it will help and more likely to apply HTB does not appear to have yet affected the public’s perception of increased difficulty in getting a mortgageHTB cannot assuage potential buyers’ concerns over the future value of their home falling – this may limit HTB take-up
  • Lack deposit – esp younger Also qualifying esp 35-44 yr oldsHigh property prices – esp males and C1, also NW, London & SELack property esp AB, NE, NW least for London, SW and SENo barriers – least for younger
  • Help To Buy Reasearch

    1. 1. Help to Buy Research Thought Leadership Research Watson Burton © Acritas Research Ltd 2013 Watson Burton Thought Leadership 1
    2. 2. Agenda  Aim  Context  Attitudes to Help to Buy and its impact  Summary and conclusions/ implications © Acritas Research Ltd 2013 Watson Burton Thought Leadership 2
    3. 3. Aim  Provide material from which to develop materials to assist in raising Watson Burton’s profile amongst housebuilders and the wider construction market  ‘Red tape over planning procedures and mortgage loans are hampering the growth of the house-building industry’ – alongside this, are we turning into a nation of renters, more in line with the European view of property ownership?.... What is the impact of Help to Buy?’  Sought Housebuilders’, experts and public opinion © Acritas Research Ltd 2013 Watson Burton Thought Leadership 3
    4. 4. Context © Acritas Research Ltd 2013 Watson Burton Thought Leadership 4
    5. 5. Housebuilders’ perceptions of public attitudes to buying “Fundamentally people will still want to move, people will still want to buy new houses, people will still want to get onto the property market. It doesn’t matter whether the press ... say houses are too expensive. That is what people generally want, that is their psyche, they want to own their own property. So there isn’t any lack of demand.” Graham Cope , Redrow © Acritas Research Ltd 2013 Watson Burton Thought Leadership 5
    6. 6. Public attitudes to renting & buying  Q.8 To what extent do you agree/disagree with the following?  Buying is preferred to renting, but renting gives greater flexibility, future prices are too uncertain & may not lead to increasing wealth Agree (8-10) Neutral (4-7) Buying is better than renting Renting is more flexible than buying 41% Renting is better than buying Important to get on the property ladder Buying is important part of future planning 12% 7.3 9% 7.3 9% 6.7 51% 34% 49% 24% 17% 55% 44% 6.1 19% 57% 20% 10% 7.3 38% 54% 6% 31% 58% Future house prices are too uncertain Now more acceptable to rent than it was 40% 54% Home ownership no longer = increasing wealth Mean Disagree (1-3) 5.6 24% 45% 5.3 4.0 Base: Omnibus survey All 2009 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 6
    7. 7. People still want to buy  Q.1 Are you hoping to take out a mortgage or re-mortgage to move home or buy your first home in the next two years (excluding buy-to-let)?  Q.2 Have you considered moving or buying home with the aid of a mortgage or buying your first home (excluding buy-to-let) at any point in the last five years? 33% already own outright & 32% are buying with a mortgage 15% hope to take out a mortgage/ remortgage in the next 2 years 18% of those who don’t hope to, have considered it before Owned outright Owned with a mortgage Rented from the council Rented from a RSL Rented from someone else Rent free Tenur e 33% 32% 14% 6% 13% % wanting to remortgage: 13% 20% 12% 14% 27% 0% % of those who don’t, who have considered it 9% 29% 12% 8% 29% 16% © Acritas Research Ltd 2013 Base Omnibus survey 2009/2009/ Watson Burton Thought Leadership 7
    8. 8. The market  Land values remain low and the economy weak  Increasing rate of private renting – up from 217k households p.a. in 2007 to 245k households in 2011 – but rents now more expensive than mortgages in half of the UK (and now deemed unaffordable for low income families in a third of Britain)  Government actively seeks to unblock planning hold ups through ‘Atlas’  2,291 Home purchases completed under New Buy (to Mar 31st)  300 Reservations per week under Help to Buy - and since it started: Help to Buy transactions: Housing starts Mortgage lending House prices 3.1% 17% 15% ~ 10,000 since launched © Acritas Research Ltd 2013 Watson Burton Thought Leadership 8
    9. 9. Housebuilder views of the market pre-HTB The constraint on mortgages has been an encumbrance to sales.” Graham Cope , Redrow “The whole market had started to stagnate [due to] large deposits and restricted lending on mortgages.... There was a real shortage of first time buyer funding available. ” Kevin Belsham, Taylor Wimpey “Levels of new mortgage advances had massively decreased” Anon “The overall mortgage pot has shrunk, very substantially, and if there is less money available then clearly it is going to go to those parts of the market that are high value and lower risk” Anon “After the 2007 property bubble and subsequent crash, the market needed to rebalance. This happened between 2007 and late 2012.By the end of 2012, there was a good match between demand and availability.” John Anderson, Kier Group Some players left the market/ merged and those left have less capital © Acritas Research Ltd 2013 Watson Burton Thought Leadership 9
    10. 10. Housebuilder views of the market schemes pre-HTB NewBuy and builders’ shared equity schemes - limited success  Too restrictive and difficult to administer  Negative impact on housebuilders’ balance sheets “We had NewBuy come in 18 months ago which was quite a difficult process with banks and mortgage lenders. That had an immediate effect, [but] slow uptake ... The reasons are the fees payable etc.” Graham Cope , Redrow “We saw an improvement in lending funding conditions in the UK mortgage market prior to the introduction of HtB, because the Funding to Lending scheme definitely lowered the funding rates on mortgage products... The house builders introduced our own shared equity products to try and reduce the deposit requirement to something around 5%, with a 15-20% shared equity contribution.... The problem that we had in the industry was we all had quite a lot of cash locked up in the balance sheet for these products. ” Anon “The other problem was with us having to contribute half as well; you were basically spending a lot of your working capital. ” Anon © Acritas Research Ltd 2013 Watson Burton Thought Leadership 10
    11. 11. Top barriers to buying  Q.3 What do you regard as the single greatest barrier to you buying a home?  Q.4 What are the next two biggest barriers?  High property prices, mortgage availability and difficulty in qualifying are the top barriers 22% High property prices 56% 27% Lack of mortgage deposit 51% 16% Difficulty in qualifying for mortgage 44% 8% Lack confidence in sustaining… 28% 6% Lack of suitable property Lack of mortgage availability Risk of home value falling Other No barriers 23% 3% 20% 2% 13% 8% 10% 9% 9% Single barrier Top 3 barriers BASE: Omnibus survey those considering moving and those hoping to mortgage/ remortgage 564 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 11
    12. 12. Single greatest barrier by tenure  Q.3 What do you regard as the single greatest barrier to you buying a home? Owned outright Lack of mortgage deposit Owned with Rented from a a mortgage Rented from housing or loan the council association Rented privately 8% 18% 43% 27% 50% High property prices Difficulty in qualifying for mortgage Lack confidence in sustaining payments 24% 25% 14% 31% 18% 12% 12% 27% 22% 20% 3% 12% 9% 3% 4% Lack of suitable property 10% 6% 5% 3% 3% Lack of mortgage availability 6% 4% - 3% 2% Risk of home value falling 3% 2% - 2% 2% No barriers 8% 18% 43% 27% 50% Base: Omnibus survey those hoping to, or have already considered, taking out a mortgage/ remortgage 564 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 12
    13. 13. Top 3 barriers by tenure  Q.3 What do you regard as the single greatest barrier to you buying a home? Owned outright Owned with Rented from a a mortgage Rented from housing or loan the council association Rented privately Lack of mortgage deposit 55% 52% 55% 62% 68% High property prices Difficulty in qualifying for mortgage Lack confidence in sustaining payments 19% 40% 85% 74% 78% 29% 39% 51% 54% 63% 22% 32% 33% 26% 25% Lack of suitable property 34% 27% 9% 16% 17% Lack of mortgage availability 25% 20% 11% 19% 21% Risk of home value falling 11% 18% 6% 9% 9% No barriers 20% 11% - 3% * Base: Omnibus survey those hoping to, or have already considered, taking out a mortgage/ remortgage 564 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 13
    14. 14. Impacts of crash  Q.9 To what extent do you agree/disagree with the following statements about the impact of the financial crash on you?  Main impacts are securing mortgages, increased concern about children’s future and retaining any disposable income Agree (8-10) It has become much more difficult to get a mortgage to buy a home I am more likely to worry about my children's ability to buy a home I am less likely to have money left over once I've paid my basic living expenses I am more likely to worry about keeping up my mortgage payments I am more likely to worry that I will never get on/up the property ladder I am more likely to worry that the value of the home I buy will fall It has had little effect on me Neutral (4-7) Disagree (1-3) 49% 24% 37% 25% 23% 27% 25% 12% 4% 39% 6.3 41% 12% 40% 6.9 6.5 35% 11% 40% 7.4 33% 10% Mean 7.8 24% 37% 25% 17% 3% 6% 47% 27% Not applicable 6.2 23% 4% 4.5 Base Omnibus survey All 2009 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 14
    15. 15. Current experience of Help to Buy  Q.7 Which of the following best describes your current situation? Applied and Especially 35-44 yr olds (11%); accepted Applied and rejected and males (6%) 4% 4% Don't know 12% Not applied Especially renters (41%) ... yet but intend to ... and younger people: within 2 years  18-24 yr olds (43%) and <45 25% Do not yr olds (32%) more likely intend to than 45-64 yr olds (9%) apply 55% Especially 18-24 yr olds (17%) Especially homeowners (67%)... and 45+yr olds (74%) ... and C2 (70%) 18-24 yr olds (18%) less likely than all others Base: Omnibus survey - All respondents who have heard of ‘Help to Buy 308’ © Acritas Research Ltd 2013 Watson Burton Thought Leadership 15
    16. 16. Help to Buy Helpfulness Higher Half of those who have or are actively considering buying a home have heard of ‘Help to Buy’ (52%) under a third of these think it will help them 18-24 year olds C1 DE Renters HTB applicants/ intenders Lower C2 Lower © Acritas Research Ltd 2013 AB Homeowners 55+ yr olds Awareness Higher Watson Burton Thought Leadership 16
    17. 17. Builders’ attitudes to Help to Buy  Something was needed! Positive Helped increase funding availability Lenders responding positively to HTB Better than NewBuy/ First Buy Helped to rebuild confidence and competition in the mortgage market Enquiries, off-plan sales & building rates Scope well designed How sustainable is it? Funding may run out before the end of 3 yrs What happens when it finishes? Negative Housebuilders and experts © Acritas Research Ltd 2013 Watson Burton Thought Leadership 17
    18. 18. Attitudes to Mortgage Guarantee  Jury’s out – but hopeful! Positive Expected to involve a range of lenders Lenders offering “decent rates and not restricting it through other mechanisms” Anon Hope offers may be designed to assist the second hand market Controls in place to avoid boom and bust Scope too broad? Introduced too late How long is the quota going to last? May lead to increased house prices Hiding an underlying wider market fragility? “What happens towards the end of the scheme?” © Acritas Research Ltd 2013 Watson Burton Thought Leadership Negative Housebuilders and experts 18
    19. 19. Impact of HTB on public attitudes  Q.8 To what extent do you agree/disagree with the following? Mean (1= totally disagree; 10=totally agree)  Those thinking HTB will help them appear more positive about renting and concerned about future house prices than others 9 Renting is better than buying 8 Future house prices are too uncertain Home ownership no longer = increasing wealth Renting is more flexible than buying Now more acceptable to rent than it was Important to get on the property ladder Buying is important part of future planning Buying is better than renting 7 6 5 4 3 Public opinion Those hoping Those Aware of HTB Think HTB to get a considered can help them mortgage in taking a next 2 years mortgage in Base Omnibus survey all 2009, hoping for a mortgage 299, considered a last 5 years mortgage 302, aware HTB 315, Think HTB will help 91 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 19
    20. 20. Impacts of HTB on perceptions of crash  Q.9 To what extent do you agree/disagree with the following statements about the impact of the financial crash on you? Mean (1= totally disagree; 10=totally agree)  Those thinking HTB may help them express greater concern about the future value of their home falling, getting on the property ladder and keeping up payments than others 8 It has had little effect on me 7.5 7 I am more likely to worry that the value of the home I buy will fall 6.5 I am more likely to worry that I will never get on/up the property ladder 6 5.5 I am more likely to worry about keeping up my mortgage payments 5 4.5 I am less likely to have money left over once I've paid my basic living expenses 4 3.5 3 Public opinion Those hoping Those Aware of HTB Think HTB to get a considered can help them mortgage in taking a next 2 years mortgage in last 5 years I am more likely to worry about my children's ability to buy a home It has become much more difficult to get a mortgage to buy a home Base Omnibus survey all 2009, hoping for a mortgage 299, considered a mortgage 302, aware HTB 315, Think HTB will help 91 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 20
    21. 21. Perceived impact of HTB  Overwhelmingly positive “Things have been improving in the mortgage market over the last period.” John Slaughter Director of External Affairs HBF "Definitely is stimulating house building. The equity loan ticks all the boxes for affordability of house purchases... it's given us a much more confident position than we were pre-budget” Kevin “Increased sales ... Help to Buy really helped the market” Tony Johnson Commercial Director Miller Belsham, Taylor Wimpey “We should get more normalisation, standard 90-95% mortgages coming back at more favourable rates..” Anon “Virtually all builders in the UK are not building efficient delivery rates on sites, we have been constrained by demand ... on an average site we are building only 60% p.a. of what we would have built in the better days. There is huge potential to increase the number of plots completed on each site each year. So that gives confidence to get more efficient build rates.” Anon Housebuilders and experts © Acritas Research Ltd 2013 Watson Burton Thought Leadership 21
    22. 22. Perceived impact of HTB  Overwhelmingly positive, but ....... “We also need a functioning planning system and we need to tackle regulatory burdens on the industry.” John Slaughter Director of External Affairs HBF “I see this as being not in place beyond May 2015 and the election” Anon “I think there are a lot of things happening at the moment, not just Help to Buy” Graham Cope, Redrow “[Lack of] capacity in terms of skills, bringing trades, sub contractors, suppliers. Also the ability to recruit good staff, as the industry lost a lot of good staff in the down turn.” Anon “There will an impact on pricing, material pricing, impact on trades, impact on sellers and what they are going to get for their land... there have been issues with trades becoming more difficult to actually find... materials are becoming more expensive” Graham Cope, Redrow © Acritas Research Ltd 2013 Watson Burton Thought Leadership Housebuilders and experts 22
    23. 23. HTB – bubble?  Not really expected....  Controls in place  New builds only  Market so depressed before “Some of the figures I've seen about potential price increases there is absolutely nothing from our perspective to support those price increases” Kevin Belsham Taylor Wimpey “I think the bubble position is overstated but it is not entirely wrong.” Anon “Risk of serious damage to the market” John Anderson, Kier Group  But major concerns about how Help to Buy ends © Acritas Research Ltd 2013 Watson Burton Thought Leadership 23
    24. 24. Meeting Help to Buy targets Mainly driven by the larger builders  But achievement may be hampered by:  Planning system   Lack of land availability/ increased land prices ?  Banks being too risk-averse  Lack of skilled labour and rising materials prices  Smaller builders’ ability to resource HTB administration Housebuilders and experts © Acritas Research Ltd 2013 Watson Burton Thought Leadership 24
    25. 25. Maximising Help to Buy  Builders already adapt their sales and marketing to take advantage of schemes – but a joined-up campaign may work better?  Help to Buy is seen as a significant improvement on earlier schemes, so very few suggestions made by builders:     Include properties up to £1m? Speed planning decisions Increase land availability Maybe narrowing the scope of HTB towards the end of its life Housebuilders and experts © Acritas Research Ltd 2013 Watson Burton Thought Leadership 25
    26. 26. Maximising Help to Buy “It’s certainly a fantastic initiative ... and one that we're taking full advantage of.... It does everything - it targets first and subsequent buyers, it's well supported by all the lenders, it's well run by the Home Buy agents, it has a very simple process and its very easy to get approvals for the scheme. The administration runs like clockwork, there isn't actually any downside to it. .. There will have to be some form of tapering, towards the end of [Help to Buy] ...[But] there can't be a sudden drop off the cliff edge.” Kevin Belsham, Taylor Wimpey Housebuilders and experts © Acritas Research Ltd 2013 Watson Burton Thought Leadership 26
    27. 27. Conclusions  We’re not turning into a nation of renters...people want to buy  True that the proportion of households renting has increased since the crash  But still lower than historic (1970) levels  And private renters and current mortgagees are the most likely to seek to move or buy a new home  Despite uncertainty over future house prices and an acceptance that home ownership no longer leads to increasing wealth, only marginally more people think renting is more acceptable now and buying is preferred to renting by the majority  The crash is perceived to have impacted negatively on securing mortgages, raised concern about children’s future ability to buy a home and retaining any disposable income after paying basic living expenses © Acritas Research Ltd 2013 Watson Burton Thought Leadership 27
    28. 28. Conclusions  Government actions are helping the market – in the short term  True that Government actions to unblock red tape and Help to Buy appear to be helping to boost purchases and housing completions but  Still much land remains blocked due to its valuation  Planning system, regulation and labour/ materials restrict house building  The greatest real and perceived barriers to buying remain lack of mortgage deposit, high property prices and difficulty in qualifying for a mortgage  HTB is designed to help to reduce the cash deposit buyers have to find  High prices – which particularly affect renters - are unlikely to be reduced through HTB  Will qualifying for a mortgage – which also affects private renters – be eased by HTB? © Acritas Research Ltd 2013 Watson Burton Thought Leadership 28
    29. 29. Conclusions  Help to Buy is helping – to a point ...  Half of those who have or are actively considering buying a home have heard of ‘Help to Buy’  But is it being appropriately targeted?  But only a third of those who have heard of ‘Help to Buy’ think it will help them to buy a property  Some intransigent perceptions  Builders think it will help in the short term  But fears over its sustainability  Too early to judge the mortgage guarantee impact © Acritas Research Ltd 2013 Watson Burton Thought Leadership 29
    30. 30. Conclusions  Expect to meet Help to Buy targets  A house price bubble is not generally expected – because:  Previously depressed market situation  Adequate controls are in place  Although there are split opinions amongst builders  The way the schemes are run towards their end appears critical to the longer term impact on the market © Acritas Research Ltd 2013 Watson Burton Thought Leadership 30
    31. 31. Appendix © Acritas Research Ltd 2013 Watson Burton Thought Leadership 31
    32. 32. Housebuilders and Experts (attributable only)  John Anderson, Kier Group  Kevin Belsham, Taylor Wimpey  Graham Cope, Redrow  Steve Errington, Storey Homes  Tony Johnson, Miller  Patrick Law, Barretts  Andy Nelson, HCA  John Slaughter, HBF © Acritas Research Ltd 2013 Watson Burton Thought Leadership 32
    33. 33. Omnibus sample  Online survey of 2009 – conducted 10-12 July 2013  Demographically representative sample 18-24 12% 25-34 17% 35-44 17% 45-54 18% Not working but seeking employment 5% 55-64 15% 65+ 22% Not working and not seeking employment/sick 6% Retired state pension 6% Working full time 45% Working part time 12% Retired - private pension 19% 49% Male 51% Female DE 24% C2 22% AB 27% C1 27% House person 7% Base Omnibus survey 2009 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 33
    34. 34. Omnibus sample - continued  Online survey of 2009 – conducted 10-12 July 2013  Demographically representative sample Current tenure Current location 14% South East 33% Owned outright Owned with a mortgage 32% Rented from the council 14% 13% Rented privately 11% North West 10% Eastern South West 9% West Midlands 9% 6% 1% Yorkshire &… 9% Scotland Rented from a housing… Rent free 13% London 9% 7% East Midlands Village 15% 5% Wales North East Hamlet & Isolated 2% 4% NET: Rural 17% Urban Population over 33% Town and Fringe 33% Base Omnibus survey 2009 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 34
    35. 35. Single greatest barrier to buying  Q.3 What do you regard as the single greatest barrier to you buying a home?  Single greatest barriers are mortgage related and prices Lack of mortgage deposit 27% High property prices 22% Difficulty in qualifying for mortgage 16% Lack confidence in sustaining… 8% Lack of suitable property Lack of mortgage availability Risk of home value falling Other No barriers © Acritas Research Ltd 2013 6% 3% 2% 8% 9% Watson Burton Thought Leadership BASE: Omnibus survey those considering moving and those hoping to mortgage/ remortgage564 35
    36. 36. Public awareness of HTB  Q.5 Have you heard of 'Help to Buy'?  Half of those who have or are actively considering buying a home have heard of ‘Help to Buy’ (52%)  Especially:  Males (58%)  55+ yr olds (70%)  Public sector workers (61%)  AB (62%)  Homeowners (56%)  Least known by:  Females (47%)  18-24 yr olds (39%)  Private sector workers (46%)  C2 (42%)  Renters (47%) Base: Omnibus survey those hoping to, or have already considered, taking out a mortgage/ remortgage 564 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 36
    37. 37. Public attitudes to Help to Buy  Q.6 Do you think it could help you to buy a property in the next two years?  Under a third of those who have heard of ‘Help to Buy’ think it will help them to buy a property  More likely to think it will help them:  18-24 yr olds (57%)  AB, C1, DE (31+%)  Renters (41%)  If already applied for HTB (accepted100%; rejected 82%); or intend to do so (69%)  Least likely to think it will help them:  45 – 64 yr olds (8%)  C2 (13%)  Homeowners (23%) Base: Omnibus survey those hoping to, or have already considered, taking out a mortgage/ remortgage 564 © Acritas Research Ltd 2013 Watson Burton Thought Leadership 37

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