Builder yet to see impact from Help to Buy 2

The York-based firm said charges of five per cent are double that of the Government’s initial Help to Buy scheme.

The group, best known for its Charles Church and Westbury Partnerships brands, said demand for Help to Buy 2 has been muted since the launch a month ago.

Persimmon’s chief executive Jeff Fairburn said: “There is only one lender, NatWest, that is offering Help to Buy 2 at the moment. Others will come forward in the new year. Five per cent is the only rate and it’s double the 2.5 per cent of Help to Buy 1, which is the best scheme for new houses.”

Help to Buy 1 is available for new houses only whereas Help to Buy 2 is available for new and second hand. Mr Fairburn said that despite the slow take-up, he is a fan of both Help to Buy 1 and 2.

“Help to Buy is working well across the country,” he said. “People need to think how much more affordable it is to buy a new house. Everyone benefits from new housing.

“We’ve already seen 3,000 sales on Help to Buy 1. We’re now seeing more people who have houses to sell. They can sell now that Help to Buy 2 has come along. It can support the second-hand market.

“Help to Buy 2 supports the whole of the market place. We expect to see interest rates come down a bit as more lenders come in. It’s what happened with Help to Buy 1.”

Under Help to Buy 2, the Government is offering a guarantee of 15 per cent of the loan to the lender. The guarantee is available on new and existing homes worth up to £600,000 and allows buyers with as little as a five per cent deposit to apply

Halifax and Bank of Scotland are launching a two-year fixed-rate loan for people with a five per cent deposit with a rate of 5.19 per cent.

Persimmon and the other housebuilders have been some of the biggest beneficiaries of Government efforts to help homebuyers and free up mortgage lending.

Persimmon said that visitor levels to its sites between July 1 and November 5 were 20 per cent higher than a year earlier.

“It demonstrates the increasing confidence in the market,” said Mr Fairburn. “More people are coming forward and we’re converting more of them. We’re responding to what their requirements are – the right product, the right site and the right prices. Some 80 per cent of our buyers are achieving a mortgage.”

Cancellation rates are running at historically low levels of 16 per cent, down from 20 per cent in 2012.

Persimmon said it is now fully sold for the current year, with £650m in forward sales reserved beyond 2013, a 41 per cent increase on the £462m last year.

The weekly private sales rate is 45 per cent ahead of last year, partly reflecting the slower market conditions experienced through the summer of 2012 due to the impact of the Queen’s Jubilee celebrations and the London Olympic Games.

“It is against a lower comparison, but we’re very pleased with the direction of travel this summer. It’s still very positive,” said Mr Fairburn.

Persimmon said selling prices remain “firm” in all its regional markets and it has recently increased build rates to meet surging demand.

“Yorkshire is seeing an improvement,” said Mr Fairburn. “York city has announced plans to expanding housebuilding and we’re very pleased with that. We’ll be a big part of the plans.”

Simon Usher, regional director of Persimmon Homes Yorkshire, said improvements are being seen month on month as more people gain confidence in the economy and take advantage of the new schemes.

“It’s not just first-time buyers who are taking advantage of the scheme, but also second-time buyers looking to either move up the property ladder or cut the cost of their outgoings,” he said.

“In our experience of the local market, we don’t believe the second part of the Help to Buy scheme will have such an impact due to the limited number of lenders involved and the higher interest rates.”

Fears of a housing bubble

There are fears that the Help to Buy scheme could fuel a housing bubble as prices have risen sharply in recent months.

Figures from Halifax yesterday revealed house prices surged by 6.9 per cent annually in October as they continued to rise at their fastest rate in more than three years.

A 0.7 per cent month-on-month increase took prices to £171,991 on average, marking the ninth monthly rise in a row.

But estate agency chain Foxtons said sales in the London area had remained largely flat in 2013 due to a shortage of supply of properties coming to the market and low availability of mortgage finance.