Five years of the Help to Buy Equity Loan has sent private housing output soaring 28.8% over its pre-recession peak, reigniting calls for the scheme to be continued past 2021.
Construction output continues to fall, however private housebuilding remains a bright spot and output remains at historically high levels, according to the latest ONS data.
“People talk about the industry not delivering, but the industry has increased its output by 74% in four years,” said John Tutte, Chairman of Redrow. “There were 217,000 net additions last year, which is ahead of the targets set in the Conservative Manifesto in 2016. The industry is delivering.”
The £403 million increase in private housing work in December 2017, which represents the fifth consecutive month of growth, has led to the value of private housing work reaching its highest level on record.
Rebecca Larkin, Senior Economist at the Construction Products Association, said, “Overall growth in construction activity slowed significantly over the course of 2017, with output falling since Q2 and rising only 0.9% in annual terms in Q4.
“The quarter saw continued growth in private housing driven by five years of the Help to Buy equity loan… However, even with the government’s £7.4 billion equity loan outlay so far and a further £10 billion set aside, housebuilding activity could not offset the broad downturn in R&M, commercial and industrial.
“Underscoring the supportive effects of the government’s Help to Buy policy, private housing output is now 28.8% higher than its pre-recession peak. By contrast, commercial output is 26.4% below its historic high, whilst industrial output is 28.5% lower.”
The news comes as UK Finance data revealed that 2017 saw the number of first-time buyers reach its highest level in a decade.
Many housebuilders have attributed positive results to the Help to Buy scheme. Redrow recently said that in the first half of the financial year just under 40% of its private reservations utilised Help to Buy, prompting its bosses to urge the government to guarantee the scheme’s future beyond 2021.
“Help to Buy has delivered more homes for the country as a time they are desperately needed,” said Steve Morgan, CEO of Redrow. “If it’s pulled, it could have a significant effect on the market place. Is that really what we want as a country? We need to deliver more new homes, not less. Taking away what is a principle driver of new homes isn’t wise.”