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Firstbuy Could Lock Young Homebuyers Into Falling Property Market

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http://www.guardian.co.uk/business/2011/mar/27/firstbuy-scheme-fears-falling-property-market

Firstbuy could lock young homebuyers into falling property market

Scheme designed to help cash-strapped first-time buyers could subsidise housebuilders, analysts warn

Campaigners are warning that George Osborne's "Firstbuy" scheme to help cash-strapped young voters onto the property ladder is a subsidy for housebuilders that could lock vulnerable buyers into a falling market.

The £250m scheme, under which homebuyers with a 5% deposit will be able to borrow a further 20% of the price of a new home from the government and housebuilders, was one of the few giveaways in the chancellor's second budget last Wednesday.

But the independent Office for Budget Responsibility expects house prices to fall by 2.3% this year, and grow by just 0.1% the year after, and many analysts are expecting sharper declines.

Appearing before MPs at the cross-party Treasury select committee on Friday, Jonathan Portes, director of the National Institute for Economic and Social Research, criticised the chancellor's scheme, saying "the main financial impact of giving help to first-time buyers is to pump extra money into the demand side and boost house prices. That's the last thing future first-time buyers or the economy as a whole needs."

Osborne's plan is very similar to "HomeBuy Direct," a scheme introduced under Labour. Matt Griffith, of the pressure group Pricedout, said, "the experience of HomeBuy Direct has also been that it put too much power in the hands of the developers – who were often bringing forward the least sellable properties for inclusion in the scheme and selling at above market prices."

Matt Griffith, of the pressure group PricedOut, says some of the homeowners who took advantage of Labour's similar scheme have been trapped in properties where prices fell substantially as the housing bubble burst.

Asked whether the new scheme could also leave homebuyers lumbered, with depreciating new-build properties, a Treasury spokeswoman said: "I don't think that level of detail is fixed yet." The scheme will be operated under the auspices of the department for communities and local government.

Paris-based think-tank the Organisation for Co-operation and Development, whose vote of confidence in the UK economy was cited by Osborne, urged the government to impose a tax on the value of all properties, to discourage speculation and tame the boom bust housing market.

aaaaaaaaaand COMMENT

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the whole scheme will account for about 20k transactions.

wow. that'll fire some juice into market. :blink:

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Paris-based think-tank the Organisation for Co-operation and Development, whose vote of confidence in the UK economy was cited by Osborne, urged the government to impose a tax on the value of all properties, to discourage speculation and tame the boom bust housing market.

Hopefully, the self-evident is becoming mainstream.:D

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Scheme designed to help cash-strapped first-time buyers could subsidise housebuilders, analysts warn

There is no 'could' about it. This is a definite subsidy to house builders (as is the BTL tax favour). And it's also an absolute negative for the existing homes market as it removes some demand that is directed towards the new build market.

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House prices are only going one way now and that's up! Either First Time Buyers take up this generous opportunity now and get on the ladder soon or the dream is over and they'll get left behind.

I once really believed a crash was going to happen, but the tide has turned again. :unsure:

Sarcasm surely?

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Surprisingly good comments opposed to the scheme from Guardian readers or newly registered HPC gate crashers!

It's not just HPC ... we know about pricedout, and dipping my toe into the Motley Fool's property board shows very firm HPC sentiment there too.

Not to mention all the mainstream press reported here.

We're mainstream!

[anyone read the sunday papers? I expect they're full of the usual mix of bulls, bears, and in-betweens.

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House prices are only going one way now and that's up! Either First Time Buyers take up this generous opportunity now and get on the ladder soon or the dream is over and they'll get left behind.

I once really believed a crash was going to happen, but the tide has turned again. :unsure:

i love these ironic posts

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How awful!

What are we going to do?

Troll on the goldprice crash forum - anyone rememeber that in 2005? What happened to it?

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Not at all. After the budget I concluded this government will also do anything to stop a house price crash. Then I went into my local Estate Agents and couldn't believe the number of people piling in there Friday ...took me well over an hour to be seen. My Estate Agent, told me he couldn't believe how busy they had so suddenly become. Add to that, how mortgage rates have suddenly dropped on many mortgages over the past week.

I wish it were not true. Those who still think there will be a crash are seriously deluded. Doesn't matter how much you wish for something, it's just not going to happen now.

Good luck to you. But I'm certainly seeing nothing of the sort.

The last government couldn't prevent prices falling 20% and neither can this one.

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the whole scheme will account for about 20k transactions.

wow. that'll fire some juice into market. :blink:

At lease it will stimulate an increase in the number of houses being built. More houses on the market generally means lower prices.

Also second hand houses aren't included in this offer, so it should only have effect on brand new FTB houses.

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'The property ladder is a simple concept. You pay your mortgage and year by year you go up the ladder, then after 25 years you reach the top and own the house.'

*facepalm*

Not if

1. You have an interest only mortgage

2. Five or ten years after taking the mortgage you have to buy the part of the house/flat you did not buy at the start.

3. The Interest rate goes up while you wages are going down.

4. Number 3 goes up so much that you are unable to pay and get repoed

5. In the case of 3 and 4 you end up with no house but a big debt.

6. The debt in number 5 is so big the only way out is to go bankrupt.

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Sibley surely?

FTFY

Not at all. After the budget I concluded this government will also do anything to stop a house price crash. Then I went into my local Estate Agents and couldn't believe the number of people piling in there Friday ...took me well over an hour to be seen. My Estate Agent, told me he couldn't believe how busy they had so suddenly become. Add to that, how mortgage rates have suddenly dropped on many mortgages over the past week.

I wish it were not true. Those who still think there will be a crash are seriously deluded. Doesn't matter how much you wish for something, it's just not going to happen now.

I see it very differently. I don't think the piddly FTB scheme will help anything at all.

Lots of juicy falls here in leafy Bucks where prices have held up well for the past couple of years. Nothing is selling, more coming on the market at lower prices forcing existing stocks to reduce prices. Looks like some very healthy falls coming this year.

One example is house that came on for £499,950 late last summer. Dropped now to £450,000, changed agents twice, open day this weekend. I doubt they even had a viewer on it as the area here is small so expect anyone interested would have seen it already. Also while there were only a couple of 4 bedders like this on the market last summer there are now 8 to choose from - all been on the market since Jan or earlier. Quite a few 10% falls reported via property bee this month and still nothing shifting.

Doesn't look like the kind of market where prices rise to me.

Edited by chubba

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Not at all. After the budget I concluded this government will also do anything to stop a house price crash. Then I went into my local Estate Agents and couldn't believe the number of people piling in there Friday ...took me well over an hour to be seen. My Estate Agent, told me he couldn't believe how busy they had so suddenly become. Add to that, how mortgage rates have suddenly dropped on many mortgages over the past week.

I wish it were not true. Those who still think there will be a crash are seriously deluded. Doesn't matter how much you wish for something, it's just not going to happen now.

I can only go by my own experience. My house is on the Market, having bought it on 2007. No viewings yet and don't mind in the slightest if I have to take significantly less than I paid for it because I know I will be able to pass on any "loss" I make on to the house I eventually buy. View a nice 5 bed detached in a good area the other day. Offered the vendor about 8% less than the price he paid in mid 2003. Vendor's first response was a rejection of the offer but he came back with a figure which matches what he paid for the house in mid 2003.

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I think the FirstBuy scheme is a great idea and definitely one to get the market kick started a little more. Great news for the young. I'm currently looking for a new home in Chorley.

You must be seriously desperate to sell those overpriced shit holes if you're spamming on a website called house price crash!!

:lol: what a prat!

Edited by Pent Up

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I think the FirstBuy scheme is a great idea and definitely one to get the market kick started a little more. Great news for the young. I'm currently looking for a new home in Chorley.

I too want to pay over the odds for a shiny new build that is smaller than the average bear booboo.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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