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Help to Buy ‘makes market too big to fail’


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"Britain’s housing market has become “too big to fail” because of the government’s exposure through Help to Buy, an industry veteran has claimed.

Greg Fitzgerald, chief executive of Vistry, the housebuilder formerly known as Bovis Homes, said the next housing market downturn would differ from previous crashes because the government would have to explain the loss on its investment to voters.

https://www.thetimes.co.uk/article/help-to-buy-makes-market-too-big-to-fail-0pslfs7mx

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Government has pumped about £16bn in to HTB, not sure it would class as an investment as they just act as the deposit and that is owed back on sale. Then again, I'm not sure what you'd call it other than a HPI prop! :D

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14 minutes ago, hayder said:

even if the properties halved and every single HTB sold up with a loss it would mean about £8Bn loss for HM Gov.

Not nearly big enough to be a moral hazard.

The government would lose the lot. I believe how it works is that if prices drop then first the borrower loses their deposit, then the government loses theirs and then the borrower owes the bank the difference between the sale price and the mortgage.

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3 minutes ago, This time said:

The government would lose the lot. I believe how it works is that if prices drop then first the borrower loses their deposit, then the government loses theirs and then the borrower owes the bank the difference between the sale price and the mortgage.

Yes I think this is right.

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3 minutes ago, Si1 said:

I do find the fact the govt is essentially bailing out the buying errors of the middle classes to be utterly shocking.

A Tory government at that, usually the fiscal hawks of the bunch.

 

10 minutes ago, This time said:

The government would lose the lot. I believe how it works is that if prices drop then first the borrower loses their deposit, then the government loses theirs and then the borrower owes the bank the difference between the sale price and the mortgage.

Thanks for this, I know the figures regarding amount of public money behind HTB but not necessarily the workings when it comes to prices. Could get very ugly indeed.

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1 hour ago, highcontrast said:

"Britain’s housing market has become “too big to fail” because of the government’s exposure through Help to Buy, an industry veteran has claimed.

Greg Fitzgerald, chief executive of Vistry, the housebuilder formerly known as Bovis Homes, said the next housing market downturn would differ from previous crashes because the government would have to explain the loss on its investment to voters.

https://www.thetimes.co.uk/article/help-to-buy-makes-market-too-big-to-fail-0pslfs7mx

these **** should be jailed for the rest of their lives.

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I agree the government views housing market as too big to fail but HTB isnt really a part of their thinking. Governments have wasted billions on plenty of things, failed IT systems come to mind, and while a political embarrassment they know they can get over it. Balancing budgets and throwing around money means little now. Billions of pounds is an abstract concept to the public and means little. What the government know they cannot get over is a crash that will dramatically lower the value of millions of voters homes. 

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9 minutes ago, nothernsoul said:

crash that will dramatically lower the value of millions of voters homes. 

The same voters who embrace all things capitalism but won't accept the idea of a free market when it comes to housing! :D

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2 minutes ago, nothernsoul said:

What the government know they cannot get over is a crash that will dramatically lower the value of millions of voters homes. 

Exactly. A housing market crash is the death knell for a political party. But at what point will the majority want prices to come down? When today’s kids are unable to fly the nest?

We’ve been saying for nearly two decades on here that it’s unsustainable, and yet they keep on finding ways to pump it up. The control of prices needs to be taken out of their hands.

If a global pandemic and Brexit don’t make prices drop, nothing will. 

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26 minutes ago, ForGreatLager... said:

Exactly. A housing market crash is the death knell for a political party. But at what point will the majority want prices to come down? When today’s kids are unable to fly the nest?

We’ve been saying for nearly two decades on here that it’s unsustainable, and yet they keep on finding ways to pump it up. The control of prices needs to be taken out of their hands.

If a global pandemic and Brexit don’t make prices drop, nothing will. 

https://www.marketwatch.com/story/the-world-is-on-the-cusp-of-a-new-era-says-deutsche-strategist-and-heres-what-it-means-for-markets-11599589831

 

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2 hours ago, TheCountOfNowhere said:

these **** should be jailed for the rest of their lives.

They don't seem to know any limits, do they?

They've been accepting these handouts for years, have been consistently lobbying for further support and now turn to this!

The problem is that the public support it. As soon as there is a new tower block of flats proposed in my area (which has now moved beyond the HTB limit), anyone who opposes it is dressed down with the argument - 'we need more housing you know, so this a good thing'.

They don't seem to realise that building £1m flats isn't really helping anyone but the developers and the councils hit their 'targets'.

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  • 415 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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