Help to Buy creates surge in new homes

mayonnaise

We often hear on these forums that Help to Buy doesn't do much to address supply issues and also drives up prices.

Let's debunk this myth once and for all.

More than 40% of new homes built under the Help to Buy equity loan scheme would not have been delivered without the introduction of the scheme, new research has claimed.

Massive boost on the supply side, we can all agree.

A new report found 43% of new homes have been built as a direct result of the scheme since 2013.

Impressive.

'What about prices?' I hear you say.

It also said there is no evidence Help to Buy has driven up house prices

Apart from the usual suspects, we knew this already.

http://www.localgov.co.uk/Help-to-Buy-creates-surge-in-new-homes-says-report/40320

HappyMJ

Help to Buy enables purchasers to buy a bigger house than they otherwise would have been able to afford.

I doubt they would not have purchased anything at all. They may have been able to afford a 2 bedroom terraced house and instead they can buy a 3 bedroom semi detached property with the assistance of Help to Buy.

I doubt it makes much difference. Higher supply means lower prices overall but Help to Buy then increases demand pushing the asking price of new developments back up again negating the effect of higher supply.

Graham_Devon

The government claiming a government scheme is a success?

Come on now.

The report itself doesn't claim that 40% of homes wouldn't have been built. Rather it states:

Here, developers perceived that generally around 40 - 50% of Help to Buy Equity Loan sales would not have translated into full market sales – mainly on the basis of deposit requirements rather than income multiples. This is not to say that this proportion would never have bought – rather that they were enabled to do so at that time.

This raises issues. As the report cites, this implies that building is totally demand led. In that scenario, prices can never fall, but, as we have seen, development numbers can fall back - leading to a rise in prices, leading to further demand stimulus measures required. (Hello, HTB 40% for London).

Crucially, and this goes against the headline claim...

No interviewee (building firms) mentioned any slow-down in sales with respect to non Help to Buy Equity Loan sales.

Suggesting that the houses would have got built regardless of HTB.

The review actually has something for everyone, regardless of views on HTB. It's how it's interpreted that matters and clearly the government has interprested that it means HTB is great. Which, erm, they would.

Finally, NO business is going to say a demand side subsidy is a bad thing. As the report is so focused on builders, it's hardly surprising that the overall outcome is positive.

Note how the review doesn't consult a single critique of the scheme. Only those who benefit.

wymondham

of course it helps...... it helps people buy overpriced houses....

mayonnaise

Graham_Devon wrote: »

The government claiming a government scheme is a success?

Come on now.

Graham,

The report's authors are listed on the first page of the report.

Come on now.

Graham_Devon

mayonnaise wrote: »

Graham,

The report's authors are listed on the first page of the report.

Come on now.

I know - I've been looking at the report.

Take a look yourself.

Doesn't matter who the authors are. Ask kids if sweets are good and you'll get a specific answer.

Ignore the parents, the nutrition experts etc and the report will conclude sweets are very good.

westernpromise

What I always find fascinating is the crash trolls' shriek that things like Help To Buy somehow benefit landlords. I struggle to understand how a scheme that takes people out of the rental market helps people with property to let out.

CLAPTON

so help to buy hasn't created more new homes than before the financial crash even though the population has risen by nearly 5 million

curious.

Graham_Devon

Even more curious is that everyone who cannot stand government support for social housing etc love HTB and will back it to the hilt.

CLAPTON

Graham_Devon wrote: »

Even more curious is that everyone who cannot stand government support for social housing etc love HTB and will back it to the hilt.

in what way does HTB encourage a lifetime of dependency and unemployment

mayonnaise

Graham_Devon wrote: »

Even more curious is that everyone who cannot stand government support for social housing etc love HTB and will back it to the hilt.

Nothing curious about it.

HTB gets people on the housing ladder at little or no cost (maybe even profit) to the taxpayer, social housing keeps people in long-term housing dependency at huge taxpayer expense.

A no-brainer really.