House prices to SURGE beyond peak thanks to Help to Buy

IzzyFreedman

They also say "‘We expect the Chancellor’s new Help to Buy scheme will push up house prices before it raises housing supply.’ "

Yes I can see this, housing supply will increase a great deal over the next few years, loads of unsuspecting people will be buying at overvalued prices with the government guaranteeing 20% then as the global financial crisis gets even worse all those mortgages the government guaranteed will be underwater and they will have to print a lot lot more currency to bail out the banks who will be losing loads with all the repossessions they had to sell cheap at auction, now that supply is more than demand and no one can pay their mortgages now interest rates are going up to try and fight inflation.

IveSeenTheLight

IzzyFreedman wrote: »

They also say "‘We expect the Chancellor’s new Help to Buy scheme will push up house prices before it raises housing supply.’ "

Yes I can see this, housing supply will increase a great deal over the next few years, loads of unsuspecting people will be buying at overvalued prices with the government guaranteeing 20% then as the global financial crisis gets even worse all those mortgages the government guaranteed will be underwater and they will have to print a lot lot more currency to bail out the banks who will be losing loads with all the repossessions they had to sell cheap at auction, now that supply is more than demand and no one can pay their mortgages now interest rates are going up to try and fight inflation.

I see a lot of assumptions there

IzzyFreedman

A lot of assumptions everywhere.

for example what is any different about this new scheme? This is just the latest in the long string of government schemes to keep property overvalued. I doubt this will be the last before property reverts to true value.

marathonic

IzzyFreedman wrote: »

A lot of assumptions everywhere.

for example what is any different about this new scheme? This is just the latest in the long string of government schemes to keep property overvalued. I doubt this will be the last before property reverts to true value.

What makes you think it'll ever revert to true value, whatever that is?

Do you think government intervention will ever be withdrawn completely?

You can pick some arbitrary number out of your head such as "3 times annual earning" or "the level of mortgage that can be serviced by 30% net income". However, these are just numbers and, at the end of the day, the true value of any asset is whatever a buyer is willing/able to pay. It doesn't matter if that's a pint of milk, an ounce of gold or a house.

IzzyFreedman

marathonic wrote: »

What makes you think it'll ever revert to true value, whatever that is?

Do you think government intervention will ever be withdrawn completely?

You can pick some arbitrary number out of your head such as "3 times annual earning" or "the level of mortgage that can be serviced by 30% net income". However, these are just numbers and, at the end of the day, the true value of any asset is whatever a buyer is willing/able to pay. It doesn't matter if that's a pint of milk, an ounce of gold or a house.

Manipulations always come to an end, then values usually overshoot on the correction when revert from overvalued to undervlaued and then the cycle repeats. It has happend throughout history.

I know some on here try and argue the cycle will not repeat anymore from now on and that property will never ever be undervalued ever again, but I disagree.

Can anyone answer my question as to.............

Hang on the daily snail said "Overall, the CEBR’s report said house prices will reach an average of £227,000 next year compared to £222,000 now, and continue to rise after that."

Where did 222K come from? I thought average house prices were in the 160K mark?

padington

IzzyFreedman wrote: »

A lot of assumptions everywhere.

for example what is any different about this new scheme? This is just the latest in the long string of government schemes to keep property overvalued. I doubt this will be the last before property reverts to true value.

So the prices in London will keep going up for a long while yet then ?

marathonic

IzzyFreedman wrote: »

Manipulations always come to an end...

And assuming someones long-term goal is to own their own home before they have children and settle down, should they put their lives on hold until the manipulation is removed, if that were to ever happen?

In my opinion, the government will continue to manipulate until such times that they think prices will stay afloat without it....

BobQ

Turnbull2000 wrote: »

Interest rates won't rise above 1% for a very long time. It would hurt mortgage borrowers and house prices way too much to even consider it.

Mortgage rates may however go up more.

IzzyFreedman

marathonic wrote: »

And assuming someones long-term goal is to own their own home before they have children and settle down, should they put their lives on hold until the manipulation is removed, if that were to ever happen?

In my opinion, the government will continue to manipulate until such times that they think prices will stay afloat without it....

Yes well that's another matter, some may decide to buy when it suits them. This is a different thing about if property is over or undervalued.

So you are one of those who thinks the long term cycle will no longer repeat?

IveSeenTheLight

IzzyFreedman wrote: »

values usually overshoot on the correction when revert from overvalued to undervlaued and then the cycle repeats. It has happend throughout history.

And it will happen again.
The correction of 2007/2008 was greater both nominally and as a percentage than the correction of the 90's.
We then saw a slight recovery before nominal stagnation for the last 3 years.

Some on here have remarked that during that stagnation, there has continued to be a "real term" correction.

Can you not conceive that potentially we are at the start of the next cycle?

Still a little too early from my perspective to confidently predict sustainable HPI from her on in, but certainly there are some signs until of course the next bubble occurs.