'HPI should be capped at 5%' - RICS

wotsthat

CLAPTON wrote: »

If there is a loan to income cap then indeed people will be able to borrow less.
that will reduce house prices
however the 'relative' position of the rich will remain.. I don't see why the relativity changes

Prices rise. A funding cap is introduced. The poorer end of buyers can no longer buy, BTL's can still buy, the less well off then enrich the BTL's. The gap increases.

This is happening because presumably prices are rising so those shut out don't subsequently benefit from 5% pa increase in housing wealth. The gap increases.

I bought a second home not so long ago. It would have suited a FTB but credit controls prevented them from getting a mortgage. I was able to make a lower offer safe from the competition of pesky renting FTB's. I was better off than the FTB in the first place and in the meantime the property has increased in value by, say, 5% - I'm even better off now.

Credit controls as discussed would disproportionately advantage the rich.

Graham_Devon

michaels wrote: »

While they are at it they should also cap house price falls at 5% pa...financial illiteracy taken to new heights (lows?)

Why are you having a pop yet again? It was RICS that stated this, not me.

If, as RICS suggest, strict lending multiples were applied, this would in itself limit the HPI rises and therefore, remove the potential of falls.

Also, price falls HAVE been "capped" effectively. What do you think all the intervention was about?

Running_Horse

Makes no difference to us what prices do, but I know people who bought post 2007 and are now stuck and unable to move. They need prices to rise a little and the market to pick in order to be able to get on with their lives. It is an unwise government that tries to control prices in a free market, and the only winners will be BTL types. Perhaps they could stop beer prices rising and pubs closing before interfering in the housing market.

Graham_Devon

wotsthat wrote: »

Well it's the stupidest idea I've heard today.

Say house prices increase by 6% so credit controls are introduced. This means the wealthier, those with help from BOMAD, and BTL's (with higher deposits) will make up a bigger proportion of buyers.

FTB's will reduce in number. Builders will build less. Sellers will sit tight. There's a transfer of wealth from the less well off to the better off.

Lower house prices doesn't mean more people will be able to buy.

Where have you been for the last few years?

How is any of that different to now exactly?

Graham_Devon

Carl31 wrote: »

The media focus on it at present is whats interesting

Certainly is. It's all about confidence and changing how people perceive HPI. All of this news and warning over help to buy is actually working. Theres far more concern pretty much everywhere, bar, it seems the BBC.

And personally I'm finding the insults and attempts to ridicule any posting of it interesting too.

Graham_Devon

wotsthat wrote: »

Prices rise. A funding cap is introduced. The poorer end of buyers can no longer buy, BTL's can still buy, the less well off then enrich the BTL's. The gap increases.

The point is, why would more BTLs be buying in such a market where potential gains are capped and actively being capped at the time.

You can't ignore this when coming to your conclusions.

wotsthat

Graham_Devon wrote: »

How is any of that different to now exactly?

..err...it's not.

chucky

Graham_Devon wrote: »

Why are you having a pop yet again?

Predictably the victim routine comes out when the Devon blokes point of view is challenged and he doesn't have a reply...

The Muddle routine wil be next...

IveSeenTheLight

Graham_Devon wrote: »

The point is, why would more BTLs be buying in such a market where potential gains are capped and actively being capped at the time.

You can't ignore this when coming to your conclusions.

How many times?
Capital gains is a bonus when the asset is sold, not the model in active BTL.

What this does is potentially increase the rental demand whilst capping the price.
Theoretically it bodes for increased Rental Yield

N1AK

Graham_Devon wrote: »

The point is, why would more BTLs be buying in such a market where potential gains are capped and actively being capped at the time.

You can't ignore this when coming to your conclusions.

5% is a great return on property so I doubt it would be much of a disincentive to BTL. If the removed the tax break on BTL mortgage interest that would be a slight disincentive at least.

Nothing other than a massive increase in house building in areas with excess demand is going to solve the problem.