Demand for homes is at its highest level in two decades and the market will remain strong even if government support for buyers falls away, according to the boss of one of the UK’s largest housebuilders.
“I have more confidence than at any time in the last 20 years about underlying demand,” said Pete Redfern, chief executive of Taylor Wimpey.
A recent flurry of activity from homebuyers, which has pushed house prices to record highs, may have been “triggered” by government stimulus measures but were not the main factor stoking demand, he added.
“I’m still of the view that the stamp duty holiday isn’t a big part of what we’re seeing . . . What we’re seeing is more driven by underlying demand,” said Redfern, adding that low interest rates and high mortgage availability were propelling buyers to the market.
Chris Millington, an analyst at Numis, said those factors were driving demand and price growth across housing markets in Europe, “even where you’ve not seen a big stimulus or tax change”.
In the UK, coronavirus had triggered people to reappraise their housing needs and encouraged moves, particularly among those who had held off buying due to the political uncertainty created by four general elections and two referendums since 2010, he added.
“So there are structural factors. But let’s not pretend the government hasn’t benefited the [UK] housing market in recent years too,” said Millington.
There are fears among mortgage lenders that prices might fall when government support measures — in particular a stamp duty holiday introduced in July last year which saves buyers up to £15,000 in tax — are removed in the autumn.
On Monday, ministers introduced a new mortgage guarantee scheme, encouraging banks to lend up to 95 per cent of a property’s value by guaranteeing a portion of the loan. But lenders that have signed up to the scheme will not lend against new build properties amid fears that price falls could leave buyers of new homes trapped in negative equity.
“Banks are overly cautious on that . . . House price moves which cause negative equity are unlikely,” said Redfern.
In a trading update on Thursday, Taylor Wimpey said the average price of its homes edged up in the first three months of this year, and the value of the company’s order book for new properties increased by £140m to £2.8bn in the year to April 18.