Clear majority of people support Help To Buy

N1AK

HAMISH_MCTAVISH wrote: »

Rents have risen to new record highs since house prices fell.

Why do you think they'd fall if more people were prevented form buying for longer, thus forcing more people to compete for the limited rental stock we have?

I don't and that isn't my position but a rather obvious straw-man you're attempting to create. If I was willing to engage in that kind of debate I'd be asking you why you think the housing market would be healthier if starter homes cost £2,000,000 and FTBs had to give a kidney as a deposit, but I'm not and I won't.

Rents have risen because their is a large group of people unable to buy and a comparative shortage of property. What I'm in favour of is a long term solution to this which requires more nuance than just encouraging people to take on ever larger debts.

HAMISH_MCTAVISH

N1AK wrote: »

I don't and that isn't my position .

Wait a minute, you said....

If house prices decreased by another ~10-20% in real terms over the next few years then the amount needed for a deposit would be smaller compared to incomes and rents would likely fall as well

I'm asking, how would rents fall?

N1AK

And you said

HAMISH_MCTAVISH wrote: »

Why do you think they'd fall if more people were prevented form buying for longer, thus forcing more people to compete for the limited rental stock we have?

Which still isn't my position; beyond which it also doesn't actually make any sense. Someone buying a property to live in just decreases the rental pool further.

If house prices did fall in real terms by 20% over for example 6 years then it would put downwards pressure on rents because:

• Demand for property as an investment would fall.
• Lower prices mean a lower rent can earn equivalent margin
• Land value speculation would decrease

House building would begin again regardless as companies accept they can sit on land and wait for the government to kick-start another boom. Banks would begin lending less stringently as the risk of losses due to defaults and further price falls decrease.

The government should be encouraging the construction of more property directly rather than trying to light the fuse on another gold rush.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Wait a minute, you said....



I'm asking, how would rents fall?

This seems a weird question, considering rents have fallen for each of the last 4 months.

HAMISH_MCTAVISH

Graham_Devon wrote: »

This seems a weird question, considering rents have fallen for each of the last 4 months.

Rents fall in winter ever year. The index is not seasonally adjusted.

They continue to rise in both nominal and real terms year on year.

davo75

I believe it was clarified that the scheme is also open to those wanting to buy a second home. I just read this interesting review of the Budget changes to the UK housing market and they say the scheme welcomes those "wishing to purchase their first or subsequent new homes"

http://www.struttandparker.com/news/residential-property/strutt-and-parker-2013-budget-reaction/

But I really don't understand how these two groups can be included as one in the Help to Buy scheme as they will be in very different financial positions surely?!

oz0707

N1AK wrote: »

If house prices did fall in real terms by 20% over for example 6 years then it would put downwards pressure on rents because:

• Demand for property as an investment would fall.
• Lower prices mean a lower rent can earn equivalent margin
• Land value speculation would decrease

House building would begin again regardless as companies accept they can sit on land and wait for the government to kick-start another boom. Banks would begin lending less stringently as the risk of losses due to defaults and further price falls decrease.

The government should be encouraging the construction of more property directly rather than trying to light the fuse on another gold rush.

How do you know this will happen.
If someone has a 5% depo on a 100k priced house they only have a 6.5% depo on a 20% reduced house at 80k.

What's to say rents wouldn't stay the same and yields increase as prices drop. Aren't rental yields helping to put a floor under prices at present. How do we get rents down? More supply? More houses built.

egoode

I'm really against governments trying to manipulate the housing market like that as all that usually happens is house prices rising for no good reason. If they were limiting it just to new builds I could maybe understand if the point is to kickstart more building work however they are also including old properties and by doing that it means prices in London will just escalate out of control. It's already a sellers market in most of London and this will just make the competition even worse. I'm just hoping the offer I've had accepted progresses to exchange of contracts asap as I don't want to be still looking for a place when these measures come in.

HAMISH_MCTAVISH

N1AK wrote: »

If house prices did fall in real terms by 20% over for example 6 years then it would put downwards pressure on rents because:

• Demand for property as an investment would fall.
• Lower prices mean a lower rent can earn equivalent margin
• Land value speculation would decrease

House building would begin again regardless as companies accept they can sit on land and wait for the government to kick-start another boom. .

So why has the opposite happened in the last almost 6 years now, as rents have risen to new record highs and house building to 100 year lows, instead of what you predict should happen?

Banks would begin lending less stringently as the risk of losses due to defaults and further price falls decrease.

That isn't why banks aren't lending today.