Scottish housing initiatives are welcome

There have been numerous schemes unveiled to help boost house sales. Picture: TSPL

As tends to be the case with such things, the myriad initiatives so far announced have generated significant debate amongst industry experts, with some believing that they will help thousands to get on the property ladder whilst others fear they could lead to another property bubble.

Although individual schemes vary, the basic premise is the same – to help those on lower incomes or with smaller deposits to buy their own home. Several schemes focus on those buying new build properties, the hope being that by encouraging demand here this will help stimulate activity in the construction industry, leading to more homes and a healthier market in the long term.

In the short term, there is little doubt that these schemes will help many buyers. Large deposits remain a significant obstacle, particularly for first time buyers and ‘second steppers’, and helping to stimulate buying activity should have a positive knock-on effect further up the property ladder.

What is unclear is the extent to which these schemes can help stimulate housebuilding. Certainly, a higher level of buyer activity increases potential returns for new build developers. However, it takes longer to build a house than it does to buy one, so in the short term, there is a danger that the rise in demand is not met by an increase in supply, potentially leading to a hike in house prices.

There is also a possibility that some buyers use these schemes to borrow more than they otherwise would have done.

On balance, these initiatives can be a useful tool to support home ownership but it’s important that they are kept under constant review so that the government is in a position to react quickly if it needs to rein in their availability.

For buyers, the best advice is to remain prudent so that when interest rates rise, you’ll still be able to afford the repayments on your new home. 

• Neil Harrison is marketing manager of the Edinburgh Solicitors Property Centre (ESPC)

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