Hekp to buy HAS pushed up house prices

Landofwood

I like rice cakes

Graham_Devon

wotsthat wrote: »

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.

This I struggle with, and struggle to fathom out how you have come to that conclusion.

There is plenty of anecdotal evidence out there that suggests people will spend the most they can afford on certain things. Houses is one of those things.

So my personal feeling is that if someone has 100k and are given an extra 10k (remember, that 10k is given specifically for a house purchase, you don't just get given it to spend on a a trip to the bahamas) then they will spend the extra 10k. I'm struggling in all honesty to fathom out why you think they wouldn't.

In terms of HTB1, that 10k is simply added to the price of the house in the first place, so they don't "offer" more, it's simply the new price. (See scrappage scheme scenario).

wotsthat

Graham_Devon wrote: »

So my personal feeling is that if someone has 100k and are given an extra 10k (remember, that 10k is given specifically for a house purchase, you don't just get given it to spend on a a trip to the bahamas) then they will spend the extra 10k. I'm struggling in all honesty to fathom out why you think they wouldn't.

Of course they'll spend it; the question is how much of the £10k they'll use to bid up the house they're going to buy.

I (think) we both agree that no one in their right mind would rush out and offer £150k (or more) for a house that was £140k yesterday just because they've got an extra £10k in their back pocket.

The question is how much extra people will bid because of this extra money. It's between 0% and 100% and looking at the profile of the houses being purchased, the buyers, the mortgage size and the number of people in the market with the 'free money' it's going to tend towards 0%.

Graham_Devon wrote: »

In terms of HTB1, that 10k is simply added to the price of the house in the first place, so they don't "offer" more, it's simply the new price. (See scrappage scheme scenario).

Assertion dressed up as fact.

I've shown you that your assertions about the car scrappage scheme were wrong. The Daily Mail wanted to run a story titled something like 'car scrappage scheme con' and collected evidence to support it i.e. what's the allowance and what are the four cars that have increased in price the most in the last year. One number minus another and voila - BS reporting lapped up with disciples around the country repeating the BS to friends, family and colleagues as fact.

I've shown you stats for the UK market as a whole, I pointed out VAT had changed in the periods being compared, I pointed out car inflation was actually less than zero if you went back a further year, I pointed out the UK was an outlier (down more than the rest one year, up more than the rest the next).

I even addressed your assertion that Ford et al used the scrappage scheme to hike prices by asking why the UK was singled out because, in Germany, car prices fell during their scrappage scheme.

...and you've got the brass neck to say 'point proven' because google found you a snippet from What Car magazine.

the_flying_pig

Yeah, I mean, it's economics 101, well, it's GCSE stuff really, a policy that boosts demand will, without effective accompanying supply-side measures, push prices up. I've no idea whether these estimates of the magnitude of the effect are accurate or not obviously, but...

wotsthat

the_flying_pig wrote: »

Yeah, I mean, it's economics 101, well, it's GCSE stuff really, a policy that boosts demand will, without effective accompanying supply-side measures, push prices up. I've no idea whether these estimates of the magnitude of the effect are accurate or not obviously, but...

Build starts have increased since HTB was introduced but, yes, there's more to do. The demand side push is like trying to empty a water butt through a straw.

HTB is only a couple of billion. Just how many orders of magnitude can be attributed to this to account for HPI since launch especially when the most exciting places in terms of HPI have the least take up of HTB?

Never has so much been blamed on so little by so many - Loughton Monkey.

Glen_Clark

HAMISH_MCTAVISH wrote: »

HTB has most certainly increased .....the number of houses being built.

No because the number of houses being built is restricted by planning controls, and 'Help to Buy' does not address those. It just throws taxpayers money at the same limited supply, forcing up prices.
The planning system needs to give at least as much consideration to the homeless as it does to those comfortably housed. Putting planning decisions in the hands of local Nimbys is as much a recipe for corruption as the planning system itself.

HAMISH_MCTAVISH

Glen_Clark wrote: »

No because the number of houses being built is restricted by planning controls, and 'Help to Buy' does not address those. It just throws taxpayers money at the same limited supply, forcing up prices.

HTB 1 is only available for new builds so contributes materially to more housing getting built.

Hence why new starts are up a third since it was introduced.

There's currently a 3 year supply of plots with planning permissions at current build rates, and the best way to get those built faster is to increase the supply of mortgages.

Whilst I completely agree that over the long term, the planning permission regime is a significant factor in contributing to the housing shortage, it has not been the main problem since the credit crunch.

Graham_Devon

HAMISH_MCTAVISH wrote: »

HTB 1 is only available for new builds so contributes materially to more housing getting built.

Hence why new starts are up a third since it was introduced.

HTB is NOT the singular reason. Or indeed, may not be the reason at all.

Infact, housing starts have FALLEN over the last year, and HTB is still in play.

So if HTB1 helps to get housing built, how do you explain a fall in house building?

House building is up a third since it started. But the numbers start from extremely low bases just after the financial crash. Even without HTB, we'd have likely seen house building increase as the numbers were so low in the first place.

As you so often say, correlation does not mean causation.

wotsthat

Even the gospel according to Shelter say mortgage lending is 8.4% higher than it would have been without HTB.

I reckon a good chunk of that mortgage lending will have been used to build houses that wouldn't have otherwise been built. Of course, some think no extra houses were built and the 8.4% of extra lending went straight onto the price of houses that would have been built anyway.:)