A surge in the market come jan 2014

geoffky

[QUOTE
If you're a betting man, put a few quid in house price growth exceeding 10% in 2014.[/QUOTE]

I am..I am willing to bet that there will not be 10% growth for the uk market in 2014.....Put your money where your mouth is...;)

HAMISH_MCTAVISH

House Prices are rising now, despite endemic mortgage rationing, because we still have a massive and rapidly worsening shortage of houses.

ONS.............: +3.2% (YoY)
Halifax..........: +1.7% (YoY)
Nationwide....: +1.1% (YoY)
Land Registry.: +0.7% (YoY)
Acadametrics.: +3.0% (YoY)

House building has fallen to record lows, thanks to the mortgage famine, as builders won't build what they can't sell.

And the shortage worsens every day, and rents have soared to record highs instead.

After all, you can't fix a housing shortage through rationing mortgages, you'll only make it worse and make the next boom even bigger as a result.

So the help to buy scheme appears to be a very small step in the right direction.

The wider market scheme starting next year should also enable many more people to buy, which can only be good news.

demontfort

bristol_pilot wrote: »

I agree. There is huge pent-up demand, with the number of new households being formed each year vastly outstripping the number of new houses and it is still ridiculously cheap to borrow money. The main brake on the market has been the large deposits demanded by mortgage companies which mean that many financially sound people in good jobs but without substantial savings have not been able to get a mortgage. My sense it that this situation is about to end....and there will be another housing boom.

Clearly if you are in a good job and haven't saved up enough money for a deposit you are not financially sound and/or wish to overstretch yourself. They are financially incompetent and it makes sense not to give them a mortgage. Yes they can afford mortgage payments with mickey mouse interest rates but once interest rates revert to their norm these people will struggle.

There may be a small boom but this will be followed by a large bust (sorry ladies) when the government stop tinkering in the housing market and money become more expensive.

thedalmeny

Personally, i'm opposed to 'Help To Buy' in the form of the open housing market.

I feel schemes such as this should be used purely for the new build market, allowing demand in new build housing to allow increase in new build construction.. Leading to employment.

Unfortunately, as history has shown time and time again.. You throw money at an industry to aid it, it often uses that advantage in a way unintended by the government. For example, the banking system after the crash used a great deal of money to provided to shore themselves up.

Funding for Lending is good in principle however, since it tries to circumvent the mistakes of the past. Help to Buy however could lead to developers sitting on and rising the price of their existing housing stock, relying on increase demand to lead to increased return. Rather than increasing their housing stock.

Difficult one really, if we were so easy to read what house prices / the economy would do we'd all be rich.

I'm going to invest in Mexican jumping beans.

HarryBarry

I don't think it will make a huge difference. I've only had a quick look, but it looks like the Jan 2014 scheme will see a guarantee of 15% should the borrower get into money trouble.

So they still need to get a 95% mortgage, but presumably they get a better interest rate if the government is willing to pay 15% should they repossess the house.

So who is it actually going to help? You can get 10% deposit mortgages already (nationwide is around 4.5%), so it will help people who have 5% deposit but not 10% as long as they can afford the repayments of a 95% mortgage... or people who did have a deposit but couldn't afford the repayments, but will be able to if the bank gives a better rate for them.

I have no idea how many people fit into those categories (or if I'm even thinking along the right lines of how it works), but it doesn't seem a market changing scheme. Im really hoping the government put strict rules on it as well, otherwise whats to stop banks lending to loads of people that can't afford it and then just repossessing the house, knowing they won't make a loss on it.

grifferz

HarryBarry wrote: »

So who is it actually going to help?

I am concerned that as well as helping people who can only save 5%, it will also help people who, in 2013, can save 20% to get access, in 2014, to a much larger mortgage at the same interest rate.

Since they can now access more credit, the same properties will go up in price to match.

For the last decade it hasn't been the repayment that has stopped me getting on the housing ladder in London, it's been the deposit requirements. The repayments have always been a lot less than my rent.

If someone had £40k today that's 20% of £200k and they could buy a flat in my area. In 2014, what stops them buying a £400k property instead and getting Help To Buy to match the other 10%? Only the repayments. Will they find that £400k in 2014 buys them a lot less than £400k would in 2013, because so may other people can now afford to buy?

So I am worried that prices just scale up to match and you still end up with the average person finding it really hard to get on the ladder, as well as now having a load of lending backed by the taxpayer.

SG27

HarryBarry wrote: »

I don't think it will make a huge difference. I've only had a quick look, but it looks like the Jan 2014 scheme will see a guarantee of 15% should the borrower get into money trouble.

So they still need to get a 95% mortgage, but presumably they get a better interest rate if the government is willing to pay 15% should they repossess the house.

So who is it actually going to help? You can get 10% deposit mortgages already (nationwide is around 4.5%), so it will help people who have 5% deposit but not 10% as long as they can afford the repayments of a 95% mortgage... or people who did have a deposit but couldn't afford the repayments, but will be able to if the bank gives a better rate for them.

I have no idea how many people fit into those categories (or if I'm even thinking along the right lines of how it works), but it doesn't seem a market changing scheme. Im really hoping the government put strict rules on it as well, otherwise whats to stop banks lending to loads of people that can't afford it and then just repossessing the house, knowing they won't make a loss on it.

If people can afford the repayments on a 95% mortgage there is no reason what so ever that they can't save a minimum 10% deposit. If they can't I doubt they can budget well enough to be buying a house!

cwcw

brit1234 wrote: »

If you want to buy an older property then surely you will be looking to buy before January (Octoberish) when all the sellers put their prices up. I just hope with almost everyone against the scheme the government will do a U Turn and scrap it.

Risking tax payers money to artificially boast already overvalued house prices higher is deeply irresponsible. Also it will assist foreign buyers and existing home owners to buy multiple properties leaving priced out first time buyers still homeless.

How's the strike going anyway? Any chance you will update your signature any time soon?

HAMISH_MCTAVISH

grifferz wrote: »

Since they can now access more credit, the same properties will go up in price to match.

It really doesn't work that way.

The cause of price rises is simple, it's when demand for property exceeds supply of property, so rising prices must then exclude a sufficient number of people from buying that demand and supply regain equilibrium.

Increasing the quantity of available credit will enable more people to buy, which is a good thing.

It will likely also increase prices from today's artificially lowered levels, but this is also a good thing as higher prices will then attract more people to sell, and cause more houses to be built, so supply of houses will increase as well.

It is not a coincidence that the number of people able to buy, now that prices are lower and interest rates are also lower, is only half what it was in 2007.

[Deleted User]

As a FTB I'm mightily annoyed that this has been put in place now, creating more competition and pushing prices up right when I'm finally in a position to buy. I want to buy now before it gets worse, rather than wait.