Does Help To Buy actually help to buy?

AnotherJoe

Or in the long run, does it merely increase house prices? Prompted to post this thought by someone posting in the mortgages forum who can get a mortgage of £143k but has seen a house he fancies at £200k so wonders if HTB would enable him to increase his mortgage or otherwise buy?

So seems to me as more can afford that higher price in the long run it all cancels out? Eg if I gave everyone £10k on condition they used it to buy a house, house prices would eventually rise by £10k ?

Jason74

HTB1 is iseful, as it actually brings much needed new supply to the market by encouraging building. But HTB2 helps some people in the short term,while creating a bigger problem in the long run. In many ways it's more "Help to sell" than help to buy, and the market would imho have been a lot better off without it.

mwpt

HTB is an example of demand-side stimulus. In economics the reason for demand-side stimulus is to discourage saving and encourage spending, shifting the demand curve. Most economists accept that increasing effective demand increases prices, so my answer is yes, HTB if examined under economic theory would increase prices higher than they would otherwise have been.

However, you're on a back-water internet forum over-representing existing owners and landlords who reinforce each others views, so you're more than likely going to be told no and shown some dubious study that supports the government view that their policy is fantastic.

CLAPTON

HTB has two effects on the 'demand' side
first it increases the overall demand as its new money and so tends to increase price
secondly it shift the balance between the diffeent classes of buyer : so some-one using HTB will have a relative advantage over some-one who doesn't.

the HTB-1 which was for new builts would have had some effect on the supply side

overall the effect is to increase prices

richdeniro

Just seems to be aimed at those wanting to buy 4-500k+ properties in my experience.

Not found much for a single person living in London who earns 35k and has a 40k deposit.

wymondham

It Helps to Sell (builders etc) and buyers are told it also helps them, and yes it does increase house prices....

purch

It helps the current cohort to buy, whilst not necessarily helping future buyers...............unless they dream up another scheme.

westernpromise

What I don't follow is how you ever sell the property. You buy a £400k flat for £240k and then a few years later you want to sell it, but HTB is not available to your potential buyers because it;s not a new build, nor to you because you're not an FTB. So who buys from you and what does this enable you to trade up to?

Rachel2016

It's good to have some additional help. I have given up trying to own a property in the place I have always lived (the South East) and I am not impressed with the over priced but not very nice places for sale. I don't want all my earnings to go towards a place I feel no love for. I'm moving up North.
The help to buy ISA money will go towards the mortgage along with savings, but in reality I consider the extra money from the H2B to be extra cash which cover costs of the survey and legal fees. Personally having additional help from the Government doesn't make my wants greater, just getting on the property ladder is enough for me.

brit1234

I would say it has hampered myself getting on the property Ladder in London. All it has done is help push up prices a huge amount.

You look at the the newbuild 1 bed flats priced at £450,000 being sold for help to buy. Before it I could just buy with £100,000+ deposit and a good wage. As others said it is just help to sell for the builders at inflated prices.

The repayment of the loan will come back to haunt people badly, see below.

First-time buyers need £90,000 salary to pay off Help to Buy loan in five years

http://www.telegraph.co.uk/personal-banking/mortgages/first-time-buyers-need-90000-salary-to-pay-off-help-to-buy-loan/

CLAPTON

Rachel2016 wrote: »

It's good to have some additional help. I have given up trying to own a property in the place I have always lived (the South East) and I am not impressed with the over priced but not very nice places for sale. I don't want all my earnings to go towards a place I feel no love for. I'm moving up North.
The help to buy ISA money will go towards the mortgage along with savings, but in reality I consider the extra money from the H2B to be extra cash which cover costs of the survey and legal fees. Personally having additional help from the Government doesn't make my wants greater, just getting on the property ladder is enough for me.

as survey and legal fees are essentials, then the absence of HTB presumably means you would have had to buy cheaper