Help to Buy 'bubble' could push house prices up by 30pc

[dmo]

Anyone building any new properties at the moment?

Of course.. lots of propDevs are selling off-plan around London

[sirja]

They're selling all sorts around here, 2 to 5 bed, but my view is that it can't create a bubble, for it's only for new homes, and there isn't that many, and it will affect the underlying, older, housing stock. Once you have bought it, no one else can attract the 20% deposit loan to buy it off you.

Now if they offered 20% on all homes, then yes, we'd all be looking at £300k average prices, but they'll not do that, as their building chums wouldn't profit from it.

I thought from Jan 2014 the scheme gets extended to old builds as well

[jamesbrown]

I thought from Jan 2014 the scheme gets extended to old builds as well

It does. There's perhaps an element of truth in these schemes pushing expectations and hence price rises while supply is limited, but the recent activity is more about cheap loans (Funding for Lending etc) and an expansion of those loans to higher LTV ratios more recently. Following many years of high deposit requirements and low/negative equity holding back first/second time buyers, it's hardly surprising that there's some lift in demand now, but the demand is still pretty weak by historical standards. And wage growth is minimal. I highly doubt these schemes will have a dramatic effect on prices, and most of those speculating along those lines have a vested interest in prices increasing or their audience has that interest (Daily Fail etc.). I'd expect a period of slow/moderate growth in real terms that will be tempered by wage growth, economic stagnation and by rising interest rates beyond early 2015. I'd be less concerned about the risk of price inflation than the sub-prime mortgage fiasco being repeated over here 5-10 years down the line (they can't even agree now who will take the decision to can the scheme in 3 years, i.e. there is a very real risk it will become a semi-permanent fixture).

[AtW]

They'll soon be paying to load up on debt to keep the real estate bubble.

Here is how it will work:

1) get a mortgage on a new build only and you'll be paid 0.5% interest rate on amount of debt you get

2) bank who lend the money will get kickback from Bank of England using freshly printed money to make it worth their while

3) everybody else will be paying the price via increased inflation (everything apart from wages), this would lift Govt tax revenues.

Boomed!!!