Help to Buy may have to be scrapped, Vince Cable warns

Graham_Devon

Another voice of concern last night on Newnight in their main feature.

Lord Turner has suggested he is concerned about help to buy and we may well be "over doing" the stimulus in the housing market and we may come to regret that.

He is concerned that we have been talking for the last 4 years about the need to rebalance our economy, but what we have actually done is focused all the stimulus on the same part of the economy, therefore not rebalancing anything. We need to ask fundemental questions on the amount of credit thrown at the economy, but specifically the housing market.

He believes there is certainly a bubble in London.

Loughton_Monkey

Graham_Devon wrote: »

........He believes there is certainly a bubble in London.

Well we will find out won't we? September figures will be out soon. If there's a bubble, then it must ultimately burst and prices will fall below these figures.

If, as most people think, there could be a London bubble, then what we will see is massive increases over and above current values, and then a crash back down to today's figures.

My money is on there not being a bubble at this point.

Graham_Devon

Another day...another attack on Help to buy...

In an analysis of the housing market, Rob Wood, UK economist at Berenberg Bank, said market conditions have improved “sharply” since March, when George Osborne, the Chancellor, unveiled his planned subsidy on up to £130bn of mortgage debt, and that the policy “is not a risk worth taking” any longer.

Albert Edwards, economic strategist at Societe Generale who has described the scheme as “moronic”, added that the market is already in the midst of a bubble and a bust is “inevitable”.

Their concerns add to the growing chorus of voices warning that the Help-to-Buy guarantee, to be launched in January, could damage Britain’s longer-term prospects. Vince Cable, the Business Secretary, and Barclays chief executive, Antony Jenkins, have expressed fears of a housing boom.

Both the Chancellor and Bank of England Governor, Mark Carney, have pointed out that there is no evidence of a bubble, but Mr Wood said: “The problem is not where prices are today, but where they could be in three years.

“The scheme is not needed. Monetary stimulus and improving confidence are already driving a recovery in the real economy and in the housing market. Adding a subsidy to an already improving market is not a risk worth taking.”

http://www.telegraph.co.uk/finance/economics/10325672/George-Osborne-faces-attack-over-house-price-boom.html

Loughton_Monkey

Graham_Devon wrote: »

Another day...another attack on Help to buy...

Yes. Just another boring piece of journalism exposing complete ignorance.


To paraphrase the rest of the article.....

• It is recognised that prices are 10%/20% below 2007 in real terms.
• Demand is increasing rapidly, and new building cannot respond quickly enough. Hence real rises could well continue.
• BOE is fully on top of this and various mechanisms (including withdrawal of HTB) will be deployed if it is felt the rise is too steep.

What we are seeing here is simply not a 'bubble' and not something that is going to burst. All we are seeing is (regrettably for some) a real rise in house prices for the simple fact that demand is outstripping supply.

The supply simply cannot be boosted magically overnight. It will be a slow growth in building. Demand will not suddenly disappear overnight either. It will presumably remain high. There is, however, a price at which it will diminish due to high prices. This is pure market forces. No more, No less.

HTB is a clever ploy. Without doubt, it has kick-started the housing world, and woken up the builders. Hooray. Supply will now increase more rapidly. All the GDP spin-off from house moving will churn into the economy quicker than it would have done. Equilibrium between supply/demand/price will be reached far sooner than it otherwise would.

HTB will be withdrawn when it has served the purpose and house price inflation will revert back to historic trend lines. The only things that could stop that would be (a) a mammoth building program the likes of which we have never seen before, or (b) another mortgage famine (unlikely).

A third reason (some sort of global financial meltdown as yet unpredicted) could also cause a crash, but it would be totally unrelated to the housing market, and house prices might be the least of everyone's worries.

Graham_Devon

Loughton_Monkey wrote: »

Yes. Just another boring piece of journalism exposing complete ignorance.
.

Funny that isn't it! Seems we have a lot of poor and boring journalism around this subject. Seems the uneducated and ignorant voices coming forward are growing too!

Turnbull2000

Loughton_Monkey wrote: »

All we are seeing is (regrettably for some) a real rise in house prices for the simple fact that demand is outstripping supply

Note quite IMO. What we're seeing is an upwards price adjustment that takes into account long-term ultra low interest rates, similar to that experienced 2001-2006.

Thanks to government support and efforts to protect the market, buyers can afford monthly payments on mortgages a good 20% bigger than in 2007. Market pricing is now taking this into account, with values likely to rise 20% over the next 3 years or so.

As for Help to Buy - no, it won't be scrapped. Of that I'm sure. The housing market is just too important. Oh, and the major house builders wouldn't be happy either - many of whom are closely connected to our governing class and very influential.

Loughton_Monkey

Graham_Devon wrote: »

Funny that isn't it! Seems we have a lot of poor and boring journalism around this subject. Seems the uneducated and ignorant voices coming forward are growing too!

Then please stop posting them!

chucky

Graham_Devon wrote: »

Funny that isn't it! Seems we have a lot of poor and boring journalism around this subject. Seems the uneducated and ignorant voices coming forward are growing too!

It deserved it's own thread, a brand new one so you could discredit yourself that little bit more and people could laugh at you.

Graham_Devon

Loughton_Monkey wrote: »

Then please stop posting them!

Why?

You not got the willpower to stop yourself from commenting on such an irrelevance?

Graham_Devon

And now it seems over half of mortgage brokers (the ignorant half) want to see help to buy scrapped altogether. A further 20% of ignorant mortgage brokers want to see it scaled back.

The latest Mortgage Solutions People's Poll asked brokers whether Help to Buy should go ahead as planned or if George Osborne needs to make changes to his flagship scheme.

More than half (51%) of brokers said that the scheme should be cancelled completely while a further 20% felt the government should scale it back in some way.

Just 29% of respondents felt that the scheme should go ahead without any changes.

http://www.mortgagesolutions.co.uk/mortgage-solutions/news/2295891/half-of-brokers-call-for-help-to-buy-cancellation