Help to Buy creates surge in new homes

Graham_Devon

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.

Well it doesn't appear to be working very well then does it.

We have a massive shortage of housing. We also have HTB.

Yet builders are still building less than they could.

I know there are lots of reasons cited as to why from the builders - but one things clear, they appear to be able to manage profits pretty well.

If you read the report, you'll note the larger builders are all for even more HTB. They want to see it extended further past 2021. However, the smaller builders are far more wary and far more concerned over stability over quick HTB gains.

I really do struggle with this one. I don't understand why those who understand market principles and subsidies (and are mostly against them) in every other area are all for HTB and all for housing benefit (so long as that housing benefit doesn't support social housing, and only supports tenants in private accomodation). ....well, i do understand it, but apparently I'm wrong to state the absolute obvious.

If social tenants receive HB, it's bad for the social tenant as it creates a lifetime of need and traps them.

If the same tenant moves to a private landlords gaff, it's all absolutely fine and worthy of the support.

If money goes towards the building of social housing, it's disgraceful. If the very same money is pumped into and allows prices to rise in the private sector - crack on, masterstroke!

What some don't seem to appriciate is the further you pump prices in the private sector, the larger the call will be for social support.

CLAPTON

mwpt wrote: »

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.

what is the effect?
increased supply or increased price or both

wotsthat

mwpt wrote: »

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.

Argue the opposite to what?

mayonnaise

Jon_B wrote: »

What would I be doing now if HTB wasn't here? I'd still be renting trying to scrabble together a 10% deposit.

Yep, you'd be renting privately or alternatively, have your rent subsidised in a taxpayer funded council house. Somehow this is the preferred solution for the anti-HTB brigade. Don't ask me why.

Jon_B wrote: »

People seem to be under the illusion that HTB is a subsidy. It is not it is by definition a LOAN.

Always good to point that out once more.

Jon_B wrote: »

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.

Graham doesn't need facts.

Congrats on the house purchase by the way.

Rich2808

mayonnaise wrote: »

Did you even bother to read the report?


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

Government agrees to subsidise buying a particular good and provide guarantees to protect lenders if prices fall. As a result prices rise as the risk is removed and as the government is giving people interest free loans they can pay more and this developers can charge 20 to 40 per cent more. Sentiment is also positive for house buying - why not buy as prices will never be allowed to fall by the government.

The report can say what it likes but it's basic economics. Help to buy by definition supports higher house prices - in London people can now pay 40 per cent more thanks to the equity loan than without it, but of course that doesn't drive up prices?!;)

I merely ask in what other industry would they do this? Should we provide interest free loans for firms to buy British steel? Same logic - and same moral hazard.

Anyone who thinks help to buy isn't about raising house prices has missed the entire point of the scheme!

What next 80 per cent interest free loans for life to prop the system up?

mayonnaise

Rich2808 wrote: »

Anyone who thinks help to buy isn't about raising house prices has missed the entire point of the scheme!

If raising house prices is the purpose, then HTB is utterly failing.

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.

Yes I know, it's a conclusion endorsed by the London School of Economics, Ipsos Mori, Shelter and the Local Government Association and they have all been bribed to paint a positive HTB picture. :rotfl:

westernpromise

HTB seems to me to be a tacit capitulation to the reality that we cannot limit immigration. It is saying, in effect, that high prices are here to stay and that the customers of those who add new housing - I.e. Housebuilders - need to be supported in buying via subs.

The only other way to increase housing availability rapidly is to break houses up into HMOs, but this is rental housing and Osborne has a demographic with a very high sense of entitlement to deal with who aren't happy with renting.

CLAPTON

westernpromise wrote: »

HTB seems to me to be a tacit capitulation to the reality that we cannot limit immigration. It is saying, in effect, that high prices are here to stay and that the customers of those who add new housing - I.e. Housebuilders - need to be supported in buying via subs.

The only other way to increase housing availability rapidly is to break houses up into HMOs, but this is rental housing and Osborne has a demographic with a very high sense of entitlement to deal with who aren't happy with renting.

we are not even building sufficient housing for the new immigrants let alone tackling the pre-existing need/wants
so the only outcome will be the increase in HMOs.

mwpt

This place is funny. Entitled generation. Just suck it up and hand over the £500k for your 50m^2 apartment. Do not express any other thoughts than capitulation and/or gratitude for the previous owner for parting with it.

mwpt

wotsthat wrote: »

Argue the opposite to what?

Please guy, do your own thinking for once.