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

CLAPTON

Graham_Devon wrote: »

It's much more than the actual amount of money so far put in and increased paper wealth.

Actively telling the country that the second installment will happen in 2014 has had landlords and investors rushing in to beat and prosper from the extra demand and therefore increased HPI.

It's had the same effect to individuals too. One quick glance on the house buying board and you will find people buying now before prices are pushed out of reach when the guarantee comes in.

Sentiment. Does a lot. By focusing purely on the money put in via help to buy you risk missing the bigger picture - that being the one everyone else and all the articles are discussing.

I have to agree.

Two effects: the direct effects on sales of new properties
and the psychological one of people's expectation of rapidly rising prices.

Whatever the arguments in favour of the equity new build systems there seems no logic to guarantee loans for already loved properties.

much better to change the planning laws, scrap affordable housing levies, amend lending restrictions etc and get building more houses

we don't need increasing prices we need more houses

Loughton_Monkey

Graham_Devon wrote: »

It's much more than the actual amount of money so far put in and increased paper wealth.

Actively telling the country that the second installment will happen in 2014 has had landlords and investors rushing in to beat and prosper from the extra demand and therefore increased HPI.

It's had the same effect to individuals too. One quick glance on the house buying board and you will find people buying now before prices are pushed out of reach when the guarantee comes in.

Sentiment. Does a lot. By focusing purely on the money put in via help to buy you risk missing the bigger picture - that being the one everyone else and all the articles are discussing.

Just when I was about to come to the conclusion that you had doubts about help to buy, you post the above thorough endorsement of the scheme. As you say, even without starting properly, it's achieving the right effect of 'giving back' house price confidence to millions of homeowners who have been 'hit' so hard since 2007. About time too.

Not only are the 66% of owner-occupiers starting to recover, it's allowing a whole new constituency of first timers to join the ladder and rid themselves of the huge financial chain of having to rent - even after retirement.

Let's give it another year or so, and then extend it.

... large gin & tonics all round...

wotsthat

Graham_Devon wrote: »

Sentiment. Does a lot. By focusing purely on the money put in via help to buy you risk missing the bigger picture - that being the one everyone else and all the articles are discussing.

The bigger picture is that there's a shortage of housing (by design for some reason) an improving economy and increasing population. What effect do you think that's having on prices? How much can be attributed to Help to Buy?

Help to Buy should be judged on it's ability to increase supply over where it might otherwise have been. If it doesn't work then, unlike you, I think it can just be scrapped without any economic devastation especially if the economy keeps improving.

May as well forget it for now - HTB is locked in until the election. However, I can see HTB PTII being shelved as a political stunt to say 'just look how great the economy is doing - we don't need this scheme anymore'. Vince Cable isn't daft - I wonder if he's looking at this in the same way?

Graham_Devon

wotsthat wrote: »

May as well forget it for now - HTB is locked in until the election. However, I can see HTB PTII being shelved as a political stunt to say 'just look how great the economy is doing - we don't need this scheme anymore'. Vince Cable isn't daft - I wonder if he's looking at this in the same way?

Not sure. Downing Street have found it neccesary to release a statement on the back of what Cable has stated.

However Downing Street has insisted the Government will go ahead with the scheme.

"It will be launched," the spokesman said.

"We are faced with a situation - because of the fall in availability of 90 to 95 per cent loan-to-value mortgages - where many first-time buyers are faced with a real obstacle to making a home of their own.

"It is important we address this issue."

Graham_Devon

Barclays now also appear to be issuing statements:

Speaking at a Barclays conference in New York on Tuesday, Mr Jenkins said increasing house prices could create an out-of-control price spiral that regulators would have problems dealing with.

"We are seeing probably a more buoyant housing market for the first time in perhaps as much as a decade," he said. "That’s a bit concerning because there is the risk of a property-driven boom in the UK.

"The regulators are on it and don’t intend to let it happen, but these things can be difficult to control," he said, according to Bloomberg.

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/10301510/Barclays-chief-warns-of-housing-bubble.html

shortchanged_2

The thing is it is probably the spectre of the impending help to buy scheme that is currently driving the market now as people are starting to panic buy again because they fear the inevitable rise in house prices when this scheme is introduced in January.

So you could suggest this scheme has been a success in pushing up house prices even though it isn't actually in place yet!

Turnbull2000

Not a chance of Help to Buy being dropped. Policies that threaten lower house prices, then yeah, these generally do bring a u-turn. But a policy that boosts prices? Well, that's certain to stay.

I said when the scheme was announced that the sooner you buy the better, as prices will rise on expectations of the scheme, and will rise again once the second phase is implemented. A couple of years ago, I believe I had double digit house price growth down for a return this summer end. Looks like I might have called it six months too soon, but still, not a bad effort!

I see the house builders who helped lobby for this intervention are having a fabulous time too! Barratt's profits have surged massively, and their achieved prices have risen a shade under double digits.

wotsthat

Graham_Devon wrote: »

Not sure. Downing Street have found it neccesary to release a statement on the back of what Cable has stated.

I'm a long way from being sure but a spokesman for No. 10 saying it's going to happen doesn't really change the likelihood either way.

What you can be sure of is that George Osborne's project won't be pulled in on Vince Cable's say so. If/ when it's pulled it'll be sold as a good news story and Vince Cable won't be allowed anywhere near it.

wotsthat

shortchanged wrote: »

The thing is it is probably the spectre of the impending help to buy scheme that is currently driving the market now as people are starting to panic buy again because they fear the inevitable rise in house prices when this scheme is introduced in January.

Prices were rising anyway. Higher prices always encourage more people into the housing market.

shortchanged_2

wotsthat wrote: »

Prices were rising anyway. Higher prices always encourage more people into the housing market.

Encourage is one way of putting it, panicking is another.