Hekp to buy HAS pushed up house prices

Graham_Devon

wotsthat wrote: »

I'm not asking for evidence of prices in Ashby-de-la-zouch. You used this comment to support your case so thought you might at least have an idea how the logic worked.

Support what case?

I thought it was rather interesting. However, I didn't have a case to support.

Your need to argue is overtaking all rationality here wotsthat.

wotsthat

Graham_Devon wrote: »

Support what case?

The case that HTB may have led to prices increases over and above the subsidy itself. The case you've spend the morning arguing about and digging out prices of Ford Fiestas between 2009/10 to demonstrate. The case that has now been relegated to 'interesting' because of my irrationality.

wotsthat

Graham_Devon wrote: »

Your need to argue is overtaking all rationality here wotsthat.

Imagine an image of a pot calling a kettle black in this space.

Jason74

HAMISH_MCTAVISH wrote: »

I don't think anyone suggested that.

What we did note is that you can't cure a housing shortage by rationing mortgages, and if you prevent a million people from buying houses through restricting their access to lending, then the housing shortage will inevitably worsen.

And that's exactly what happened.

Building fell off a cliff, rents and house prices rose to new highs anyway, and the shortage worsened.



And they were.

New starts have increased by a third.

Which is nowhere near enough, but it's a big step in the right direction, given how limited and small the increased lending programme was.

HTB, FFL, and all the other interventions are only a small step towards restoring functionality to a still dysfunctional lending market after the credit crunch.

A long way to go yet with increased lending before we can build enough houses.

The problem when talking about HTB imho, is that we're talking about two very different schemes that simply share a name.

HTB1 was imho a sensible piece of government planning largely because of the issues you describe. By being set up as it was, it encouraged more housebuilding while also enabling more people to become homeowners. A win win if ever there was one.

HTB2 is of course a different kettle of fish entirely. Its main impact is to have more money chasing the same amount of product, which it doesn't take much to work out is inherently inflationary. There's also the other issue which is relevant here given that its you (the vocal "free marketeer") who's posting in support of he policy.

You're often one to say that house price rises are an example of the free market in action. If that's the case, then it also follows that a credit contraction is exactly the same thing. If you truly believe in free markets, then surely the market should have been allowed to set its own level, and house prices allowed to fall to the point where the market was willing to lend on terms that would have allowed more people could buy. It strikes me as an odd position to say that when prices are rising this is just the market doing its thing, while if the market behaves in a way that reduces demand (in the economic sense) for housing by reducing the number of people able to support a given price, that is somehow an evidence of "markt failure" that requires an intervention.

Now personally, I think that free market thinking is probably overdone in respect of housing. the key thing for me (and this fact largely discredits your argument imho) is that in the post war period, the market alone has never consistently built the level of homes that are needed. The only way to do that is to have a large scale programme of public housebuilding. Of course, we don't have that, and the Government is keen to reduce the role of secure public sector housing even further, so ultimately the problem will only ever get worse unless the approach fundementally changes :mad:

lisyloo

If one is £1 would you buy two for £2.20?

I would not but plenty of people would if it's had "special offer" all over it, because they would assume it was good value and not check the price of one.

Buy three pay for two generally increase volumes but buy two pay for three (which is what I wrote) don't.

And what I'm saying it's "special offer" that increases volumes and most people don't check whether it's cheaper or more expensive.

I'll just stop using it on the internet where it doesn't belong.

I agree it can be difficult to interpret without non-verbal comms, but as it happens the ironic statement you put up proved you were wrong, because people do pay more.

wotsthat

lisyloo wrote: »

I agree it can be difficult to interpret without non-verbal comms, but as it happens the ironic statement you put up proved you were wrong, because people do pay more.

If I was wrong then supermarkets wouldn't bother with 'buy three pay for two' and instead would go for 'buy two pay for four' and put a special offer sign on it to flag the awesomeness of the deal

I agree people's vision can be blurred when it comes to special offers (I don't buy diet coke without a calculator) but there's a limit.

Graham_Devon

wotsthat wrote: »

If I was wrong then supermarkets wouldn't bother with 'buy three pay for two' and instead would go for 'buy two pay for four' and put a special offer sign on it to flag the awesomeness of the deal

I agree people's vision can be blurred when it comes to special offers (I don't buy diet coke without a calculator) but there's a limit.

You are talking about the effectiveness of a special offer for the retailer now though.

Your buy two pay for four wouldn't be as effective as other methods, that's for sure. But that was never your argument. Your argument is that people simply wouldn't buy the product under that special offer.

They may well though. All depends on the price and what they believe at the time they are getting.

The psychology of getting free money or free products is huge. It's why it's used so often in marketing. It can, and does, overtake everything, including price.

Some vouchers for instance only allow use against fully priced products. In many cases, using your voucher means you actually pay MORE than you would if you just bought the product or service as normal. But people beleieve they are getting a special deal.

Dominoes are good at it. Spend £40 and get £20 off. The point being most people don't need £40 worth of pizza for a take out and secondly that offer is very limited to a select amount of items on the menu. But all that happens is people think "ooo, £20 of pizza free".

Relating it to houses, it's why mortgage companies do cashback. Forget the interest rate, look at the free money. HTB works in the same way. Forget the price, we're getting X amount from the government.

wotsthat

Instead of arguing about what a bloke on the FT comments page said about Help To Buy I thought I'd post latest data.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/459178/Help_to_Buy_Equity_Loan_and_Help_to_Buy_NewBuy_statistical_release_to_30_June_2015.pdf

Surprised how small the numbers are - £2.5bn to date.

Probably more column inches per £ than any other government spending.

Graham_Devon

wotsthat wrote: »

Instead of arguing about what a bloke on the FT comments page said about Help To Buy I thought I'd post latest data.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/459178/Help_to_Buy_Equity_Loan_and_Help_to_Buy_NewBuy_statistical_release_to_30_June_2015.pdf

Surprised how small the numbers are - £2.5bn to date.

Probably more column inches per £ than any other government spending.

Goes to a page not found?

Is that £2.5bn HTB cash? Or £2.5bn property value?

If it's £2.5bn cash it's spurred on likely £15-20bn of purchase value.

wotsthat

Graham_Devon wrote: »

Your buy two pay for four wouldn't be as effective as other methods, that's for sure. But that was never your argument. Your argument is that people simply wouldn't buy the product under that special offer.

They may well though. All depends on the price and what they believe at the time they are getting.

No the argument isn't that people would never ever buy that offer under any circumstances because there are always outliers to provide an exception to the rule. The rule is that people respond to special offer signs for sure but they have to be accompanied by a 'pay the same get more' type deal. It really doesn't need explaining.

Graham_Devon wrote: »

The psychology of getting free money or free products is huge. It's why it's used so often in marketing. It can, and does, overtake everything, including price.

Some vouchers for instance only allow use against fully priced products. In many cases, using your voucher means you actually pay MORE than you would if you just bought the product or service as normal. But people beleieve they are getting a special deal.

Dominoes are good at it. Spend £40 and get £20 off. The point being most people don't need £40 worth of pizza for a take out and secondly that offer is very limited to a select amount of items on the menu. But all that happens is people think "ooo, £20 of pizza free".

Relating it to houses, it's why mortgage companies do cashback. Forget the interest rate, look at the free money. HTB works in the same way. Forget the price, we're getting X amount from the government.

There's no doubt people can be a bit spesh when it comes to special offers and I like a Dominos binge but, as I said, there are limits.

If I wanted to buy a £100k house and was given a 'free' £10k towards it I wouldn't offer £110k, neither would you or anyone we know. Yet you're trying to convince me (and yourself I think) that's what has happened even though 95% of buyers every month don't get this free money.