This is one of the findings from Rightmove’s research into NewBuy which was carried out six months after its launch.
While the Government-backed scheme addresses many of the key issues facing those who feel disenfranchised from the property market, the research shows overall awareness and understanding of the scheme remains low.
The research shows:
• 44% of those who don’t feel they are in a position to buy cite raising enough of a deposit as their single biggest concern. NewBuy allows home-movers to purchase with a 5% deposit
• two thirds of first-time buyers have heard of the scheme but 49% of homeowners looking to move have heard of it
• 3 in 10 people who’d like to buy in the next 12 months but don’t feel in a financial position to do so said the scheme would help them to buy once it was explained to them.
Back in March, ahead of the launch of NewBuy, Rightmove found that awareness of the scheme was highest among first-time buyers, with more than half (55%) stating that they had heard of NewBuy. Six months on, Rightmove’s latest research finds that this figure has now increased to two thirds (66%).
However only 49% of other homemovers have heard of the scheme; this is up from 27% in Rightmove’s previous survey. When respondents who stated they had heard of the scheme were asked if they fully understood NewBuy and how it could help them, only two thirds said they did.
Rightmove’s new homes director Alex Solomon said: “Assisting first-time buyers to get onto the housing ladder is one of the key challenges in the current housing market and so it is encouraging that two thirds of prospective first-time home-movers are familiar with NewBuy, and a further two thirds of that group understand the scheme. However, it is clear that there is still a job to do to raise awareness of the scheme among other home-movers.”
The main aim of NewBuy is to help those who don’t feel they are in a financial position to move onto, or up, the property ladder. When looking at the single biggest concerns of those who feel disenfranchised from the market, it would appear that the ability to purchase with a 5% deposit through NewBuy would address their main concern.
Raising enough of a deposit to buy is the most commonly expressed concern among respondents who stated: ‘I don’t feel I am in a financial position to buy in the near future’ (43.6%) and ‘I would like to buy in the next 12 months but don’t feel I’m in a financial position to do so’ (39.4%). In contrast, for those who state they either ‘will buy’ (44.8%) or are ‘interested in buying’ (45.4%) in the next 12 months, finding a property that they want to buy is their most common concern.
Solomon said: “It is clear from our research that raising enough of a deposit is the big issue facing those who don’t feel they are in a position to buy. The terms of the NewBuy scheme, allowing homemovers to purchase a property with a 5% deposit, go a long way towards tackling this issue.
“However, with 34% of first-time buyers and 51% of other home-movers unaware of the scheme, is a major opportunity to help those standing on the sidelines of the housing market being lost?”
When respondents had the details of NewBuy explained to them and were then asked if they felt it would help their ability to buy, it was clear that the scheme has the potential to benefit those struggling to get on the housing ladder. Around three in ten respondents who stated they would like to buy in the next 12 months but don’t feel in a financial position to do so, stated they felt ‘much more likely’ (6%) or ‘a bit more likely’ (25%) to buy over the next 12 months thanks to NewBuy.
However, Rightmove identified one potential barrier to the success of the scheme. In both surveys carried out so far, 60% of general homemovers stated they didn’t feel the scheme would make a difference to them as they don’t want to buy a new build property.
Charles Haresnape, managing director of Aldermore Residential Mortgages, said: "It shouldn't come as a surprise that NewBuy has taken time to start gathering momentum, against a backdrop of a slow economy and low levels of consumer confidence.
"However NewBuy brings real benefits to hard-pressed home buyers by enabling them to own a brand new home with a down payment of just 5%. New homes are ideal for first-time buyers because they are more energy efficient and require lower maintenance than existing properties."
Aldermore recently launched NewBuy in conjunction with Fairview New Homes Limited which has developments located throughout the South and East of England and is offering borrowers a choice of a 2 or 3-year fixed rates from 5.48%.
Haresnape said the lender will be rolling the scheme out with other developers in the coming weeks.
