BuildScan: New build affordability up £132,000
New build property affordability has been increased by up to £132,000 in some parts of the market, according to BuildScan.
This is due to a double reduction in the cost of getting a foot on the new build ladder via last week’s Budget.
Research by BuildScan looked at the current average new build house price, the sum saved due to the extension of the stamp duty holiday, the reduction in mortgage deposit requirements between a 5% and 15% deposit, and what this totalled as an initial reduction in the cost of getting on the ladder.
The research shows that the current average new build in England will cost homebuyers £327,486, a 22% premium when compared to wider national market average of £269,150.
Previously, a 15% deposit on the average new build would have required homebuyers to have £49,123.
However, the ability to secure a mortgage with a 5% deposit will reduce the initial cost required to £16,374, a £32,749 drop in the initial cost of getting on the ladder.
In addition, with the extension of the stamp duty holiday, new build homebuyers are able to secure a double affordability boost when buying.
Without the holiday in place, the average new build homebuyer in England would need to pay £6,374 in stamp duty on the average property price of £327,486.
As a result, the average new build homebuyer has seen the initial cost of buying fall by £39,123 due to the Budget.
In London, this saving raises to £65,583 when considering both the reduction in stamp duty and mortgage deposit requirements.
While the least affordable new build market with an average price tag of £1.168m, Kensington and Chelsea is home to the biggest boost in new build affordability.
The combined stamp duty saving and mortgage deposit reduction in the borough totals a huge £131,780, with Westminster and the City of London also seeing this combined saving exceed £100,000.
Harry Yates, founder and managing director of BuildScan, said: “A lot has been made about the savings brought about by the current stamp duty holiday but with the introduction of 5% mortgage deposit products, the financial barrier to buying has just dropped even lower for the nation’s homebuyers.
“Regardless of what price threshold you’re transacting at, doing so in current market conditions will see you get a foot on the ladder for thousands of pounds less than you may have otherwise, thanks to the stamp duty holiday extension and a lower deposit requirement.
“Of course, this saving is all the greater for those looking to buy within the new build sector due to the generally higher cost of purchasing a brand new home.
“However, while they come at a premium with regard to price, new build homes return a far greater rate of price appreciation in the long-term.
“So the sector provides a great investment opportunity for homebuyers at present with the addition of a Budget boost to affordability.”