Help to Buy creates surge in new homes

Graham_Devon

wotsthat wrote: »

I'm thinking of HTB for new houses which is obviously new supply.

The reasons for HTB on used houses are more tenuous but the majority of HTB houses are new.

I'm quite disappointed in the new supply levels so I would've thought anyone against it is pleased the impact has been so limited.

Should've relaxed planning and not reacted to the GFC by restricting mortgages. Would've led to more supply at, arguably, lower risk to the taxpayer.

Yes, and as I said, a HTB purchaser is buying new supply - not adding to it. That new supply would be there regardless of HTB as the house is not built specifically for HTB. Anyone can buy it.

I'm just dubious over this notion that should a buyer using HTB not come along, the house wouldn't have been built.

Clearly this can be questioned by the which comes first argument - the house or the person with a HTB mortgage? Clearly it's the house.

Secondly, if were assuming a select number of houses only get built due to HTB being available - we'd also need to assume that builders would leave plots undeveloped on their land. That notion in itself is rather absurd. Why would builders leave specific plots unbuilt on? Especially when the report clearly states non HTB purchases have not been effected.

Theres no developments which are "exclusively HTB" developments. If this were the case the argument could be made that HTB has increased supply.

Therefore this notion that houses are only built due to HTB seems a little (being nice here) questionable. This is why the report itself warns on using it's data to come to the conclusion the government and OP duly did. I believe were it an article, it would be called "click bait".

Rich2808

One final thought.

Since 2010 house prices have risen by 50 per cent in London due in no small part to government policy - QE, artificially low rates, FLS and help to buy and of course Mark Carney who delivered a similar bubble in Canada.

It's now rather comical the government is now giving people 40 per cent interest free loans to buy new builds in London when if it wasn't for the government and it's policies they would be paying much - at least one third - less so wouldn't need the help. It would be laughable if it wasn't so criminal.

PS What are the scariest words in the English language - to misquote Ronald Reagan.

I'm from the government and I'm here to help you buy a house!

wotsthat

Graham_Devon wrote: »

I'm just dubious over this notion that should a buyer using HTB not come along, the house wouldn't have been built.

Clearly this can be questioned by the which comes first argument - the house or the person with a HTB mortgage? Clearly it's the house.

Secondly, if were assuming a select number of houses only get built due to HTB being available - we'd also need to assume that builders would leave plots undeveloped on their land. That notion in itself is rather absurd. Why would builders leave specific plots unbuilt on?

Theres no developments which are "exclusively HTB" developments. If this were the case the argument could be made that HTB has increased supply.

Therefore this notion that houses are only built due to HTB seems a little (being nice here) questionable. This is why the report itself warns on using it's data to come to the conclusion the government and OP duly did. I believe were it an article, it would be called "click bait".

Or businesses don't predict demand in the simplified way you describe?

I don't know why you assume builders would leave odd plots undeveloped without an HTB buyer - that's silly. Without HTB you wouldn't have random empty plots; there would just be less sites.

In terms of what comes first the house or the person with the HTB mortgage. It's neither; the builder is predicting a buyer will be available - that's why they build.

Jon_B_2

Graham_Devon wrote: »

That doesn't appear to be the case.

The report specifically cites all the dangers of coming to this conclusion.

Theres nothing to compare against. What I mean by that is that should HTB not have taken place, how do we know a certain house wouldn't have been built? We don't and never will. All we do know is that you cannot buy off plan with HTB and therefore the house needs to be built before someone can use HTB to buy it.

So by all measures, it would appear the house would have been built regardless of whether HTB was in place, as has always been the case. It might just have been sold at a lower price.
l

U wot m8?

You can and I did buy off plan with HTB.

Let's start learning a little bit about these government schemes before we start speculating.

What you can say is a developer could still have a consented land bank of a similar number of homes in the pipeline if HTB was not introduced. However these would not be getting built at the rate they are now. You only need to look at any house builder results to see that there is a massive shortage of labour and subcontractors to build houses. They literally cannot build enough quickly enough.

When house builders are claiming that on an average development over 50% are sold through HTB, you cannot honestly claim that HTB is not adding or expediting supply.

kinger101

Jon_B wrote: »

What about the people who actually use HTB?

The government in 90% of cases will actually make a net profit out of HTB - so is actually an investment on their behalf.

What would I be doing now if HTB wasn't here? I'd still be renting trying to scrabble together a 10% deposit. Consequently not as many houses would be getting built, so house prices would still be out of reach.

People seem to be under the illusion that HTB is a subsidy. It is not it is by definition a LOAN. Unless the HPC dream comes true it is a pretty safe bet.

FWIW, when I am paying over £1000/month to the tax man - it is nice to get some sort of payback occasionally.

Anecdote and data are not the same thing. The report mentions 43% ad nauseam using the old politician trick.....if you tell a lie long enough it becomes the truth.

Without going into it in detail, it's not actually possible to get any reliable measure of the impact of HTB. The people who produce these reports know this, but if you want business, you tell a story that matches the narrative the person who paid for it wants.

There are 90% and now 95% mortgages available outside the HTB scheme. HTB would have distorted the market to some extent, but the amount of house building that's going on always fluctuates depending on market conditions.

http://www.nhbc.co.uk/cms/publish/consumer/NewsandComment/Stats/Q4_2014.pdf

So it's wrong to attribute any increase in house building to this.

mayonnaise

Rich2808 wrote: »

One final thought.

Since 2010 house prices have risen by 50 per cent in London due in no small part to government policy - QE, artificially low rates, FLS and help to buy

Did you even bother to read the report?

There has also been extensive and divergent media discussion around the issue of whether Help to Buy Equity Loan has boosted house prices
As we argue it almost certainly helped to stabilise prices. However the evidence that it led to a house price boom is weak as a simple comparison between the number of Help to Buy Equity Loans and total transactions (see Table 3.3 above) and the total number of mortgage loans would indicate.
Further, as evidenced later in this chapter, the ten local authority areas with the highest Help to Buy Equity Loan activity saw median house prices between 2013 and 2014 increase by 6.5% on average. This compares to an increase of 10.5% in median house prices between 2013 and 2014 across England as a whole.

Even Graham's favourite charity, Shleter, chimes in:

A recent report from Shelter (2015) as well as other commentary (eg, Savills, 2014a and b) have also noted that
the impacts of the scheme vary by region and locality but
that it was clear Help to Buy Equity Loan was not driving the market in ways some of the more negative commentaries had suggested.

chucknorris

mayonnaise wrote: »

Did you even bother to read the report?


Even Graham's favourite charity, Shleter, chimes in:

I think HTB is very dangerous, I read on the back of a toilet door that you can catch aids from HTB!

wotsthat

kinger101 wrote: »

So it's wrong to attribute any increase in house building to this.

We can say that about the impact of any change on something else because we don't know with certainty what the alternate future would have looked like without the change.

It's wrong to assume the 43% figure comes with a high level of certainty but it's equally wrong to assume no increase in house building can be attributed to HTB.

We'd have to assume the builders would have built the houses anyway in the absence of HTB which I find fanciful.

We need new houses and, in my mind, HTB has clearly made a contribution. The question really should be has that supply been added at lowest cost and risk to the taxpayer. Possibly not.

The other question is whether there was a cheaper and lower risk alternative to add supply. Almost certainly yes but the government felt it was more palatable to help people buy than go up against the NIMBY's.

mwpt

wotsthat wrote: »

In terms of what comes first the house or the person with the HTB mortgage. It's neither; the builder is predicting a buyer will be available - that's why they build.

So they're either incredibly bad at predicting this (London) or they're under-building on purpose.

mwpt

The effects of increased credit into a market are well known and accepted. I don't understand why an economics forum would want to argue the opposite.