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copydude

Chancellor’S Measures ‘May Not Solve Housing Crisis’. Oh Noes!

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Interesting. This article is from 'Construction News', usually a mouthpiece of toff loving, tory sycophants.

Now the construction industry continues to be in serious trouble, with many recent bankruptcies, it is having dark and disturbing doubts . . . .

When Help to Buy was first launched in 2013, it was a welcome means of kick-starting housing market demand and housebuilding, which were still languishing following the recession.

Fast-forward two-and-a-half years and the equity loan and mortgage guarantee are joined by an ever-growing portfolio of Help to Buy products.

We had the Help to Buy ISA in the March Budget and now 135,000 Help to Buy shared ownership homes are planned for the current parliamentary term, alongside a London-specific Help to Buy equity loan, which increases the loan share available from 20 per cent to 40 per cent of the property purchase price.

With a maximum purchase price of £600,000 allowed under Help to Buy in London, this means up to £240,000 is available to prospective homeowners to help subsidise demand in the capital.

These policies represent the government’s attempts to address affordability issues in the housing market and achieve its aim of increasing homeownership rates.

By far the largest promise on this front is the repeated announcement of 200,000 Starter Homes to be sold at a 20 per cent discount from the open market price.

The average UK house price is now 30 per cent higher than its 2008 peak, with first-time buyers facing prices that are on average 5.1 times higher than their incomes.

It is unclear how Starter Homes will alleviate this issue.

There is a potential conflict within the government’s new-build affordable housing offering”

Outside of the capital, prices will be capped at £250,000, but this is 9.1 times the UK average annual salary for single buyers and 4.5 times for a joint purchase by two average earners, as reported in the Office for National Statistics’ annual survey of earnings.

As a result, a large proportion of the target demographic may still be blocked from stepping onto the housing ladder.

Issues with supply-side measures

It would be disingenuous to ignore the supply-side objective to build a total of 400,000 affordable homes through these schemes, but it does prompt questions of whether it will merely lead to substitution.

For example, will they simply displace affordable housing that would have been built anyway by housing associations or through section 106 agreements?

In addition, there seems to be a potential conflict within the government’s new-build affordable housing offering.

A 20 per cent equity loan offered through Help to Buy will surely be trumped by a 20 per cent discount through the Starter Home initiative, which only has to be paid back if the property is sold within five years.

Gains can thus be maximised by selling the property at full market value in year six.

The equity loan has grown in popularity and uptake peaked in the second quarter of 2015. It will be a crucial statistic to watch after construction on Starter Homes begins to judge any potential effects on demand and future building activity.

Finally, and most importantly, will these measures become self-defeating if what equates to government subsidies for purchases drive house prices higher and make property even less affordable than when the policies started?

And finally. someone has noticed that prices are out of sync with salaries . . .

Edited by copydude

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A 20 per cent equity loan offered through Help to Buy will surely be trumped by a 20 per cent discount through the Starter Home initiative, which only has to be paid back if the property is sold within five years

I hope I'm reading that wrong.

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Interesting. This article is from 'Construction News', usually a mouthpiece of toff loving, tory sycophants.

Now the construction industry continues to be in serious trouble, with many recent bankruptcies, it is having dark and disturbing doubts . . . .

And finally. someone has noticed that prices are out of sync with salaries . . .

Who is the quote from ? Seems a bit unusual to follow through on the non-Construction consequences of the policies.

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With a maximum purchase price of £600,000 allowed under Help to Buy in London, this means up to £240,000 is available to prospective homeowners to help subsidise demand in the capital.

That is completely insane. Who on earth signs that off and and thinks it what is needed?

Meanwhile the country runs a massaged deficit of £60-70b and cuts are made to things that make a difference to everyday life.

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In another drip, the BBC did a bit on R4 lunchtime News about house prices down South stifling growth (they neglected to say the Northern Power House is fecked because of it). It has become so very obvious, it has started to fester through the bandage in several normally PTB supporting pus ridden organs.

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It's funny to see the Tories pointing fingers at Corbyn and screaming 'socialist!' while deploying taxpayer funds to facilitate the purchase of houses that the free market has rendered unaffordable to the great unwashed.

Perhaps it's only socialism if the people being given the money are unlikely to reciprocate by voting Tory?

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Article is by a person called Rebecca Larkin.

There's a Rebecca Larkin on Linkedin who is described as "Economist at Construction Products Association" and whose skills are listed as "Writing and Editing". This sounds like our bunny, no? Perhaps the Economics background explains the treatment of non-construction consequences of policies.

The Construction Products Association's About Us page http://www.constructionproducts.org.uk/about-us/what-we-do/ Worried about the consequences for construction product manufacturers and suppliers?

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Gifted cash deposits in the April budget anyone

Nothing will be gifted, the government only 'helps' post-1975 babies by lending them money. The gifts are for Boomers and pre-Boomers only.

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I hadn't realised we were providing 40% equity loans specifically for over priced London.

I hadn't realised we were providing 40% equity loans specifically for over priced London.

Yes - the scheme is coming in 5 weeks before the Mayoral election. The help to buy votes scheme as you might call it - cos the Tory's polling shows private renters are more likely to vote Labour over the Tories perhaps?

Maybe Zac's kids will be able to benefit from the help to buy scheme!

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Nothing will be gifted, the government only 'helps' post-1975 babies by lending them money. The gifts are for Boomers and pre-Boomers only.

Help to buy ISA is a gift ..but yes i see where you are coming from

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It is basically another piece of evidence to suggest any meaningful correction will come in the form of the exchange rate, just like last time.

The authorities seemed to like the apparent painlessness and opacity to Joe Public. The problem is only felt in drip feed fashion as successive generations of young people age. And even then they can't understand what happened to them was a choice of their government.

Just curious whether the last time that you're referring to is the 2008 crash or the 1990s crash?

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