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Former Bofe Man Warns Govt Scheme Could Inflate House Prices By 2015

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http://www.thetimes.co.uk/tto/business/industries/construction-property/article3756979.ece

The average price of a home in Britain could reach £300,000 by the end of 2015 because the Government’s Help to Buy scheme risks inflating a new housing bubble.

In a scathing attack on the Chancellor’s plan, announced in the Budget, to get more people on to the housing ladder, a financial consultancy run by former Bank of England economists said that the scheme could push up prices by almost 30 per cent from the current

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Pure distraction, anyone who believes this is exactly the type of voter the government wants, the idea that they can re-inflate the biggest housing bubble in history is laughable. They don`t want to really, but they want "homeowners" to believe that they do so that they keep on making the payments. The take up for this scheme will be next to zero.

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http://www.telegraph.co.uk/finance/economics/9500516/State-backed-housebuilding-drive-would-cause-price-crash-warns-Fathom.html (27th August 2012)

State-backed housebuilding drive would cause price crash, warns Fathom

A state-backed housebuilding boom would not deliver the sought-after economic recovery, a leading consultancy has warned, but cause prices to crash and tip Britain's banks back into crisis.

According to Fathom Consulting, however, the plan "could have exactly the opposite effect from the one desired" – causing prices to fall by as much as 30pc, forcing banks to take large losses, and triggering a new credit crunch.

----

So today from the OPs link (above) it's reported that Fathom Consulting are predicting a 30% rise in prices - whilst laughably in August 2012 the same Fathom Consulting predicted a 30% fall in house prices. :lol:

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Pure distraction, anyone who believes this is exactly the type of voter the government wants, the idea that they can re-inflate the biggest housing bubble in history is laughable. They don`t want to really, but they want "homeowners" to believe that they do so that they keep on making the payments. The take up for this scheme will be next to zero.

On the contrary, they've been desperately trying to re-inflate the housing Ponzi from the word go. UK house prices have barely declined since the bubble burst in 2008, while London nominal is essentially unchanged. The market has been held up by govt intervention on a simply unprecedented scale. If take up of this scheme is next to zero then they will either loosen the lending criteria again or start doling out inflation busting pay-rises to the public sector, all paid for using QE and ZIRP. As I see it, it's now established beyond peradventure that the UK is embarked on the same debt trajectory as Japan, albeit at a faster rate of climb.

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it's strange how we need austerity to preserve the credibility of our nation in the eyes of the markets- but somehow taking on huge potential losses in the form of 'help to buy' et al. is deemed to have no negative impact of that credibility.

Surely the markets can see the potential danger in UK PLC effectively exposing itself to billions of losses on depreciating house prices?

Or maybe I misunderstand the issue- perhaps what the markets are looking for is not evidence of a sustainable economy but reassurance that the current bubble economy will be propped up at all cost?

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it's strange how we need austerity to preserve the credibility of our nation in the eyes of the markets- but somehow taking on huge potential losses in the form of 'help to buy' et al. is deemed to have no negative impact of that credibility.

Surely the markets can see the potential danger in UK PLC effectively exposing itself to billions of losses on depreciating house prices?

Or maybe I misunderstand the issue- perhaps what the markets are looking for is not evidence of a sustainable economy but reassurance that the current bubble economy will be propped up at all cost?

One third of the "markets" is the government buying it's own debt i.e. printing. Much of the rest is held by giant UK pension funds who have little choice but to invest large chunks in gilts and who also have little interest in seeing the value of those gilts falling by dumping them. A couple more rating downgrades may lead to murmuring but for now the action lies elsewhere, not least with the upcoming German elections.

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http://www.telegraph.co.uk/finance/economics/9500516/State-backed-housebuilding-drive-would-cause-price-crash-warns-Fathom.html (27th August 2012)

State-backed housebuilding drive would cause price crash, warns Fathom

A state-backed housebuilding boom would not deliver the sought-after economic recovery, a leading consultancy has warned, but cause prices to crash and tip Britain's banks back into crisis.

According to Fathom Consulting, however, the plan "could have exactly the opposite effect from the one desired" – causing prices to fall by as much as 30pc, forcing banks to take large losses, and triggering a new credit crunch.

----

So today from the OPs link (above) it's reported that Fathom Consulting are predicting a 30% rise in prices - whilst laughably in August 2012 the same Fathom Consulting predicted a 30% fall in house prices. :lol:

Nice find!

I can't fathom it either :)

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Warns???

That's what I thought it was supposed to do.

:lol:

Interesting comments in the Telegraph -- lots of sarcasm aimed at Osborne, and the 'good or bad?' vote comes in with 3/4 against the govt's meddling http://www.telegraph.co.uk/finance/personalfinance/houseprices/10039583/Help-to-Buy-bubble-could-push-house-prices-up-by-30pc.html#disqus_thread

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One third of the "markets" is the government buying it's own debt i.e. printing. Much of the rest is held by giant UK pension funds who have little choice but to invest large chunks in gilts and who also have little interest in seeing the value of those gilts falling by dumping them. A couple more rating downgrades may lead to murmuring but for now the action lies elsewhere, not least with the upcoming German elections.

Pension funds have no exposure or interest in gilts either rising or falling . It is a total and utter myth that they do and is a generally misunderstood aspect of the role of gilts in pensions , funds, annuities

Annuity funds are mandated to purchase gilts in order to lock in the yield required . Other than a default there is no issue as the yield is fixed at purchase . Of course there ate huge potential real long term losses but these are passed onto the pension recipients not a concern for the fund .

Final salary schemes may be slightly effected but these again are largely public liabilities and are unfunded.

PENSION FUNDS ARE NOT EFFECTED by the value of gilts merely the yield .

If you are referring to money purchase plans then yes they are effected but they buy gilts through choice not because they are mandated to

Edited by Sir Harold m

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rantnrave is spot on- this is precisely the objective.

My local MP replied to policy criticisms I sent him to say he fully supports 'Help to Buy'. Conservative, majority ~2,500.

This policy's fate rests purely on the affordability tests conducted. If the tests have any rigour whatsoever, the sales numbers suggested look unachievable.

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On the contrary, they've been desperately trying to re-inflate the housing Ponzi from the word go. UK house prices have barely declined since the bubble burst in 2008, while London nominal is essentially unchanged. The market has been held up by govt intervention on a simply unprecedented scale. If take up of this scheme is next to zero then they will either loosen the lending criteria again or start doling out inflation busting pay-rises to the public sector, all paid for using QE and ZIRP. As I see it, it's now established beyond peradventure that the UK is embarked on the same debt trajectory as Japan, albeit at a faster rate of climb.

As mentioned many times, the UK is not Japan, and sales volumes have collapsed, in effect most people have no chance of selling their house at the "supported price". The UK government has no chance of re-engineering the housing bubble of early 2000`s to 2007, no chance at all, they can`t do it financially, and they can`t put the negative sentiment genie back in the bottle. In fact I will keep saying it, they want those with no or little mortgage to drop their prices so that banks can lend again at safer multiples, those who took the equity "gains" are now going to be forced to take the pain. These schemes are designed to encourage people who are holding out to get their property on the market, and hopefully realise that someone has to open the Ponzi bag when the music stops, Gidiot is at the piano desperately playing louder and louder as his banking mates frantically throw the bag with the big turd in it round the room.

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it's strange how we need austerity to preserve the credibility of our nation in the eyes of the markets- but somehow taking on huge potential losses in the form of 'help to buy' et al. is deemed to have no negative impact of that credibility.

Surely the markets can see the potential danger in UK PLC effectively exposing itself to billions of losses on depreciating house prices?

Or maybe I misunderstand the issue- perhaps what the markets are looking for is not evidence of a sustainable economy but reassurance that the current bubble economy will be propped up at all cost?

IMO the markets are looking for signs that governments are doing everything, including pumping out schemes to make mortgage debtors believe they can somehow break even, that keep the sheeple paying their mortgages.If sheeple start walking away from debts, those higher up the food chain are going to take more "losses".

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Help to buy is just another shared ownership scheme in a different dress ,and how successful have they been? there have been many articles in the MSM of late saying it will inflate house prices by X amount

The killer bit for me is if your house goes up in price your debt also increase`s by the same %

This just screams QUICK BEFORE YOU MISS THE BOAT

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Help to buy is just another shared ownership scheme in a different dress ,and how successful have they been? there have been many articles in the MSM of late saying it will inflate house prices by X amount

The killer bit for me is if your house goes up in price your debt also increase`s by the same %

This just screams QUICK BEFORE YOU MISS THE BOAT

But as the house is likely to drop in price this could be a winner for some :lol:

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  • 243 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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