OECD calls for restrictions on help to buy

danothy

CLAPTON wrote: »

I ... would much rather that house prices were lower and relatively more stable

Graham_Devon wrote: »

As for your belief that they should be lower

It's just semantics.

chucky

Graham_Devon wrote: »

Look at any chart since say 2010 and you will see stable house prices up until April 2013 when HTB was announced.

At the very point HTB and HTB2 are announced, the chart increases dramtically.

Graham_Devon wrote: »

I think it's more than just a coincidence that house prices are running at 10.9% YOY inflation since the announcement of HTB.

I agree with you that HTB has an effect on house prices but trying to insinuate that 10.9% YOY house price inflation is due to this is all a bit silly.

Out of interest, what does the house price chart show for Devon since April 2013 when HTB was announced?

mayonnaise

I can't find the original Halifax data, but this article mentions it.

Help to Buy is not causing a housing bubble.

http://www.everyinvestor.co.uk/news/2014/02/12/viewpoint-help-buy-causing-housing-bubble-7382/

The high level data shows some interesting numbers that might help correct concern from media reports suggesting Help to Buy is contributing to a growing housing bubble.

Halifax’s first 1,000 mortgage approvals came from 5,000 applicants, so despite the guarantee from the government, and the strict application criteria for the guarantee, Halifax have a low acceptance rate. This indicates that the credit underwriting that they apply is of an even higher standard than their general mortgage book.

Additionally, the average property value for their Help to Buy mortgage applications stood at £157,660 whereas the maximum size allowed under both the equity loan and the mortgage guarantee is £600,000. The fact that their average is substantially below the allowable size indicates that the scheme is being used for standard sized loans. Even the average amount lent to borrowers in greater London is only £280,000.

Equally interesting is the geographical split of the loans: 80% of the applications were from borrowers outside London and the South East. Again this points towards increasing demand for credit across the UK market, and could help support prices across the country, many of which are still below their HPI peak. This in particular is good news.

So while the headlines of Help to Buy are inevitably going to be linked with house price inflation and bubbles by the usual suspects on MSE*, we see the scheme as being primarily supportive of improving mortgage fundamentals.

*

Who to believe...actual data from a HTB lender or the OECD with a track record of consistently being wrong. Tricky one. :think:

System

wotsthat wrote: »

Meanwhile in Devon prices are lower than 4 years ago and current HPI is only just above general inflation.

East Sussex is only showing 4% YoY. People are wetting their knickers over London and deciding the whole country is the same.

Ironic given the amount "London is propping up the figures" we've had to endure for 5 years.

Graham_Devon

mayonnaise wrote: »

Who to believe...actual data from a HTB lender or the OECD with a track record of consistently being wrong. Tricky one. :think:

Up to you really.

Though it's worth bearing in mind the vested interest of the HTB lender here. Afterall, it's Halifax who can make a profit on the mortgages the tax payers are guaranteeing in order that Halifax don't have to take as large a hit as they might.

wotsthat

Graham_Devon wrote: »

Look at any chart since say 2010 and you will see stable house prices up until April 2013 when HTB was announced.

At the very point HTB and HTB2 are announced, the chart increases dramtically.

I've looked at land reg for the East Midlands and Devon - what you assert simply isn't true. Both areas were seeing increasing prices from the start of 2013.

Prices in the South East have been on the up since the end of 2011 albeit with an acceleration from May 2013 but that's all the foreigners innit?

chucky

wotsthat wrote: »

I've looked at land reg for the East Midlands and Devon - what you assert simply isn't true. Both areas were seeing increasing prices from the start of 2013.

Prices in the South East have been on the up since the end of 2011 albeit with an acceleration from May 2013 but that's all the foreigners innit?

What a shock.

Yet another inaccurate urban myth spun by one of the usual suspects on here.

Graham_Devon

wotsthat wrote: »

I've looked at land reg for the East Midlands and Devon - what you assert simply isn't true. Both areas were seeing increasing prices from the start of 2013.

Prices in the South East have been on the up since the end of 2011 albeit with an acceleration from May 2013 but that's all the foreigners innit?

That's nice, but clearly I was talking overall house price charts. I can't possibly reference every single local area in the discussion....and neither would any half reasonable debate.

Graham_Devon

On a seondary note - this is being discussed on 5 live at the moment. The confidence issue of HTB has been discussed and accepted as one of the reasons for the HPI we have seen. Removing HTB would pull that confidence out and we could face falls again.....which is a double edged sword as the taxpayer could then face losses on the loans.

Those disagreeing with this appear to be the odd ones out in the wider debate here.

MrRee_2

HTB has no effect on HPI at all .... why do I say that?

Simple, more than 50% of properties are bought with no mortgage - of those that are, only a tiny % actually use the HTB scheme.

HPI is being driven by good old supply and demand .... cheap money too ... and a desire by the young to stop waiting and start buying, which encourages the rest of us to buy upwards too - nowt to do with HTB!