FirstBuy – are we looking at another property boom then?

I was interested to see the efforts made by the government this week to move our stalling economy.  The existing FirstBuy scheme, which was originally aimed at first-time buyers, will be extended to include anyone wishing to buy a new-build home.

The “Help to Buy” scheme, which launches on 1 April, will provide shared equity loans of 20% of the property price if purchasers put down a 5% deposit from their own savings. This is much lower than the deposits currently required by banks.

New-build homes must not exceed £600,000 in value in order to qualify for the loans, which will be interest-free for the first five years.

There will also be a new mortgage guarantee, designed to increase the availability of loans to purchasers, which extends the NewBuy Guarantee scheme to include older houses as well as new-builds. Starting in 2014, the scheme will run for three years and will support £130 billion of mortgages.  This is particularly interesting. The question that leaps to my mind is “are we in for another property boom then?  Will we see a huge surge in the housing market?” This attempt to “kick start” the population’s ability to buy new build properties will undoubtedly improve the construction industry which has (dare I say it) been damaged the most in this recession.  I can see it resulting in the further building of properties and the employment of many tradesmen who appear to have suffered most from the particularly grave consequences of this country’s economic downturn.  However, is a property boom really what we all want after what happened to us last time around?  Is this country capable of anything other than “boom” and “bust”?  We’ll see.

My prediction is that we will see the property market begin to pick up because of this scheme.  However, at the end of the 3 years are we destined to plummet to the back of beyond again?  This remains to be seen.  Some may say that the population has become too cynical to risk taking the plunge now.  However, with rental properties having become so expensive and people having waited for years and years to buy property at the “right price” from last time around, there are a lot of people out there just waiting for something like this to happen.

So, on the face of it, this looks like excellent news for all those people who have been desperately trying to raise the stupidly high deposits often required by banks or other lenders. If the measures work in the way that the Government says it intends, this should mean that more people are now able to realise their dream of buying their own property. I am all for that!

Here’s to us taking the next plunge into the unknown!

(....and let us hope we are not in the same position, as we are in now, in another few years).