We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Help to buy threat to the UK credit rating?
Comments
-
Unless the government can engineer a massive increase in house supply, very quickly, then help-to-buy can only create instabilty, and a loss of confidence.
TruckerTps - it is said to be increased demand which leads to higher prices, but there is enormous unsatisfied demand (want?) already, and HTB is simply creating an artificial ability to buy, and thereby increasing prices (as well as, for reasons which are genuinely unfathomable to me, a feeling of well-being amongst voters). We don't need Help-to-Buy, we need Help-to-Build.
TruckerT
I detect a bit of inconsistency there?
Your first comment is "unless...massive...building".....=> "Instability"
Fine. So you are saying it's mayhem if it doesn't.
Your second point is basically the status quo. i.e. "increased unsatisfied demand => higher prices."
Either the supply increases dramatically or not. If it does then you're happy because the instability risk goes away. If it doesn't then your prediction of higher unsatisfied demand, with no building pushes prices up and up. That's far from "instability". I'm not advocating it is desirable, but all the excess demand keeps prices on the high side.
Somewhere - and I don't know where it is - lies a "true" price. The true price is one that applies when new houses are coming onto the market at just about the same rate as new buyers are coming to the same market. And assuming income levels and mortgage availability are broadly consistent.
House building will surely ramp up, but there's a physical limit to the speed at which this could happen. Affluence is likely to increase [rather than decrease] and new buyers will continue to come onto the market. The market price (in my very strong view) lies still higher than the current prices.
In my own mind, therefore, this informs me of only two possibilities, and they depend upon the pace and timing of all the relevant factors. If I just throw in 10% above now as an "Aunt Sally" for the true equilibrium price, then either they will continue to ramp up steadily, tail off, and settle at that 10%. Or they will ramp up further, by, say, 15%, and then 'correct' down to 10% once the building shortage has been largely eliminated.
At some point along the way, HTB may need unwinding. It's a sort of tiller that needs moving at exactly the right time. On a 30 million ton tanker it's almost impossible to calculate the correct time.
The latter scenario I deliberately call a "correction", although the Grahams of this world would absolutely cream themselves by calling it a "bubble". This is semantics. It would just indicate a slight mistake in moving the tiller.0 -
The 25% deposit scenario was a creation of market/commercial realities.
HTB is a distortion of those realities.
Nope.
The 25% scenario was a creation of dysfunctional markets, as even the CML admit.
It was an aberration, and was always going to be temporary in nature, as all abnormalities are.
So it should be no surprise that governments and the BOE do all in their power to restore functionality to dysfunctional markets.
As is their job.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
I think that's the bit which is missing from the pro-HTBers' logic. They seem to believe that an artificially-generated house-price increase of a few percentage points will motivate the building industry into pre-crash levels of activity.
But the building industry has learned its lesson.
Banks are the ones that got burnt......0 -
HAMISH_MCTAVISH wrote: »Nope.
The 25% scenario was a creation of dysfunctional markets, as even the CML admit.
It was an aberration, and was always going to be temporary in nature, as all abnormalities are.
So it should be no surprise that governments and the BOE do all in their power to restore functionality to dysfunctional markets.
As is their job.
For dysfunctional, read 'failed'.
TruckerTAccording to Clapton, I am a totally ignorant idiot.0 -
No - they've learned not to flood the market with stock when peoples' ability to buy is dependent upon unsustainable levels of credit availability.
Nothing unsustainable about historically normal, prudent and sensible levels of credit availability.
Of course, the last 5 years have not seen those, but rather extreme mortgage rationing following the crash and global financial crisis.
But that is not normal.
And was always going to be temporary.:cool:“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
According to Clapton, I am a totally ignorant idiot.0
-
For dysfunctional, read 'failed'.
Neither UK residential mortgage lending defaults, nor UK residential mortgage lending standards, caused the failure of the UK banking system.
UK banks lost 15 times more on overseas mortgages than they did on UK ones.
Had it not been for those overseas misadventures, they wouldn't have needed a bailout at all.;)“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Nothing unsustainable about historically normal, prudent and sensible levels of credit availability.
Of course, the last 5 years have not seen those, but rather extreme mortgage rationing following the crash and global financial crisis
Some would say that sensible levels of credit availability have been restored since 2007/8, after a period of unsustainability.
TruckerTAccording to Clapton, I am a totally ignorant idiot.0 -
HAMISH_MCTAVISH wrote: »Neither UK residential mortgage lending defaults, nor UK residential mortgage lending standards, caused the failure of the UK banking system.
UK banks lost 15 times more on overseas mortgages than they did on UK ones.
Had it not been for those overseas misadventures, they wouldn't have needed a bailout at all.;)
O rite
TruckerTAccording to Clapton, I am a totally ignorant idiot.0 -
HAMISH_MCTAVISH wrote: »Nope.
The 25% scenario was a creation of dysfunctional markets, as even the CML admit.
It was an aberration, and was always going to be temporary in nature, as all abnormalities are.
So it should be no surprise that governments and the BOE do all in their power to restore functionality to dysfunctional markets.
As is their job.
I believe you are not only right, but you will be proved right.
When HTB is eventually withdrawn, or otherwise wound down, we would need to see mortgages revert to 75% max for the critics/disbelievers to be right. I simply cannot see this happening. Indeed I can't even see HTB being withdrawn unless or until Carney has physically "phoned round" all the lenders, and looked at their solvency, and satisfied himself that they are generally able to offer 90%/95% mortgages without further help.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.1K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.2K Work, Benefits & Business
- 600.9K Mortgages, Homes & Bills
- 177.5K Life & Family
- 259K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards