It’s International Happiness Day but it was never going to be a happy Budget.
Austerity is going to be extended by a year and GDP growth revised down.
But, of the few plus points in there, there were some significant announcements on housing. The Chancellor announced £5.4 billion from April 2013 for housing.
The key element of this is £3.5 billion for ‘Help to Buy’, an extension of the already successful FirstBuy. This is a mortgage guarantee whereby potential homeowners can provide a deposit of between 5% and 20% with the government providing an equity loan of up to 20% repayable once the home is sold for homes less than £600,000.
This could be a game changer and significantly raise effective demand. We know from household numbers and lack of housing the demand is there, this will make this demand latent given previous concerns regarding large deposits especially in London and the South East.
There was also the expected rise in discounts for Right to Buy, up to £100,000 and raising the affordable homes guarantee, with £225 million funding, but these two are relatively minor compared to the extension of FirstBuy.
Will this signal a major house building programme over the next few years. Let’s hope so.