More New London Homes Sell at $750,000 Than Any Other Price - BLOOMBERG
By Will Mathis
More new homes sold at program’s top price than at any other
Hamptons International says government policies distort market
A U.K. government program to help people buy homes has led to a surge of sales in London at the maximum price that still qualifies for assistance.
More newly built London homes sold for 600,000 pounds (about $750,000) in 2018 than at any other price, according to broker Hamptons International’s analysis of Land Registry data. That’s the price ceiling for buyers to qualify for low-cost loans under the government’s Help-to-Buy program, which has been a boon for developers even as the property market in London struggles.
“Policies tend to distort the housing market,” said Aneisha Beveridge, head of research at Hamptons. “Developers have been changing what they’re building and pricing these schemes to make them fit in that Help-to-Buy cap.”
Sales in London surge at the maximum price to qualify for Help to Buy program
Source: Hamptons International, HM Land Registry
Buyers in London, where homes tend to be more expensive than in the rest of the U.K., have used the program less than in other cities. Rising prices in the capital have meant fewer houses are eligible, with 63% of new-build sales coming in under the maximum price last year, compared with 86% in 2013, according to Hamptons.
In a market downturn, some buyers who used the program could face a trap of negative equity, according to a June report from the National Audit Office.
Still, the surge in sales at 600,000 pounds in 2018 shows the shifting impact of government policy. In 2012, before Help to Buy was introduced, the greatest number of sales in the capital were at 250,000 pounds, then the maximum price before the property sales tax rate increased.
(Adds information from National Audit Office in fifth paragraph.)