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UK Housing Market
help to buy scheme
Another day another house-builder reporting positive performances in the UK housing market. In what is now being called a "meaningful" recovery, the firm reports that its order book has been driven to a record high, of course it is putting this down in large part to the government's Help to Buy scheme.
Taylor Wimpey says it has GBP 1.3 billion worth of homes on order totalling 7.378 houses after a 24 percent growth this year due largely to a Help to Buy fuelled surge in reservations. According to the report 1300 of the houses ordered came in through the government scheme, 17 percent of the total and the scheme has "continued to drive increased visitors and increased sales rates in what was already a more confident market," the firm said.
The GBP 130m Help to Buy Scheme, designed to aid first-time homeowners, provides banks with a guarantee of up to 20 percent of the price of a new-build home worth up to GBP 600,000.
No one denies that the scheme has been a vital boost to the market, but some fear that it will lead to problems if it is kept running indefinitely. Indeed, Taylor Wimpey's chief executive Pete Redfern warned that the scheme could pose a "genuine hazard" to the economy by building government support into the market indefinitely, and called for ministers to set a time limit on the programme.
Taylor Wimpey unveiled the bumper order book as it posted double-digit sales and profits growth in the first six months of the year. Revenues rose 11 percent to GBP 1bn, while pre-tax profit jumped 42 percent to hit GBP 109m.
"During the first half of 2013, there has been meaningful improvement in the housing market, with more positive consumer sentiment, a more available and affordable mortgage market, and the presence of Government mortgage schemes, all adding to a favourable outlook," said Mr Redfern.
The house builder has also benefited from steadily increasing house prices. The average selling price for a property rose 6.8 percent year-on-year to GBP 188,000, boosting margins 13.5 percent, compared with 11.2 percent in the same period last year.
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