Latest first time buyer initiative, can it suceed?

Graham_Devon

In a decade, we have had:
- The first time buyers initiative
- OwnHome
- Social Homebuy
- Open Market Homebuy
- First Buy
- Kick Start

We've now got the new government underwritten guarantee. We've also had the removal of stamp duty from FTB's up to a value of £250,000. We've also had various shared ownership schemes. Despite all this, first time buyers have continued to fall. From 600,000 in 1999, to 200,000 last year. Probably less this year.

The home builders federation applauded the latest initiative, suggesting it would give a huge boost to building. The CML appluaded the 95% mortgages as a welcome boost to housing confidence.

However, big lenders were soon pouring water over the initiative.

Median house prices are now 7 times median earnings, compared to 3.5x in the mid 1990's. So, forgetting the downfalls of the scheme, forgetting this is sending FTB's into negative equity straight away...

Will it have any impact? Or will it be another failed scheme to add to the list above?

Full article, which I have dissected here: http://www.guardian.co.uk/money/2011/nov/21/first-time-house-buyers-succeed

Thrugelmir

Graham_Devon wrote: »

Will it have any impact? Or will it be another failed scheme to add to the list above?

And the alternative? Do nothing? Or very slowly brick by brick start to rebuild the UK economy and put it onto a sound footing.

geneer

Nah. Negligible impact I think. Same as it ever was. The government is playing lipservice to one proportion of voters.

MacMickster

The latest scheme is more an initiative to try to get the construction industry up and running again, rather than a genuine attempt to help first time buyers. In practice, it will probably do very little for either.

We have conflicting problems here.

1. A shortage of housing in the UK.

2. Overpriced housing.

3. Too much of our individual "wealth" tied up in bricks and mortar instead of circulating in the economy.

4. Banks having to recapitalise, so less money available for mortgages.

5. The Eurozone crisis still being played out so that our main export market faces an uncertain future.

6. An over-reliance on the financial services sector within our economy.

7. A lack of manufacturing in our economy and hence a reliance on imports.

8. Uncomfortable levels of personal and national debt.

9. Rising levels of inflation

etc. etc. etc.

Unfortunately, whilst we should be increasing interest rates to get a grip on inflation, bring down house prices and attract inward investment to the UK, we need low interest rates to prop up the financial services sector and keep personal debt levels serviceable. We need to reduce the national budget deficit (and then begin reducing the national debt) at exactly the time that the government should be investing in infrastructure projects to stimulate the economy and ready the UK to be competetive in the future.

At the moment we are facing something akin to a Mexican stand off, with everyone waiting for someone else to fire the first big bazooka.

The latest first-time buyer initiative? Not even a shot with a pop gun.

gailey_2

I think its more for developers than ftb

its not just about deposit its about monthly repayment can they afford it

rising living costs make it hard to save

if they have personal debt combined with morgage they would be heading for trouble

job market insecure

banks lending to the very few dont think they overly happy with new proposals.

rising inflation, low savings interest.

euro crisis

Just more negatives than positives right now.

skylight

I'm waiting for them to combine the doubling of the right to buy discount with a 95% mortgage. And whichever of the main parties offer that, they'll get my vote. (No brand loyalty here!)

wotsthat

From the article - made me laugh.

Several expressed concern that measures to make buying new-build properties easier were being rushed through. One lender described the proposals as "welcome as a cup of cold sick".

omits

We all know the government is not in control (a blessing?). When we've forgotten about it they will drop it like all other hot air proposals. They just make lots of money just debating it in a quango.

wymondham

Thrugelmir wrote: »

And the alternative? Do nothing?

Precisely that. Let the market decide how much houses should cost rather than constant intervention which usually back fires and increases prices, and worse still financially cripples people as the Government encourage people who's finances/circumstances are completely unsuitable for home-ownership to go for it - they are coming across like that that bad character 'nic-o-teen' cartoon character from 'quit smoking' TV ads many years ago!!

If the Government genuinely wanted this to be a 'lets house the masses' they would not have limited this to new builds only..... suspicious me thinks!

gailey_2

skylight wrote: »

I'm waiting for them to combine the doubling of the right to buy discount with a 95% mortgage. And whichever of the main parties offer that, they'll get my vote. (No brand loyalty here!)

yikes that would be perverse but guess any new builds anyone moving in wouldent have the rights to buy its for existing tennants.

wotsthat

wymondham wrote: »

Precisely that. Let the market decide how much houses should cost rather than constant intervention which usually back fires and increases prices, and worse still financially cripples people.

If the Government genuinely wanted this to be a 'lets house the masses' they would not have limited this to new builds only..... suspicious me thinks!

How is that there are not enough houses being built and that this has been happening for years? The free market should be just that but government is responsible for ensuring markets do work.

It seems to make sense that government should be giving incentives to encourage new house building rather than things like offering discounts on right to buy etc.

This is a (small) step towards this. Why not get rid of stamp duty for all new builds - anything which takes cost out of buying and/ or encourages new building is worth a try.