ALL >> Investing---Finance >> View Article
Help To Buy: More Houses Or Just Higher Prices For Uk Households?

The Government’s scheme to help homebuyers is working, but some worry it’s working too well. It serves the investor to take into account opinions from all sides.
There is an undeniable rise in the prices of homes for sale in the UK, with the largest concentration of those increases in central London. Critics have weighed in on whether this represents a return to the price bubble of the mid-2000s, and there seems to be evidence to support that. But is it really happening - and might it be due to the Government’s Help to Buy programme?
Note there is counter evidence to suggest the bubble in fact is just a natural rise in prices, reflective instead of a strong economy. What absolutely must be acknowledged up front, bubble or no bubble, is that home sales are up, that the majority of sales are to first time buyers, and that development investors (e.g., residential land investment participants) and homebuilders have ramped up their activity, building more homes at a rate that exceeds all activity in the past seven years. Given the critical ...
... shortage of housing in the UK, this last point cannot be ignored. The country is short of as many as one million residences for young families.
So what are the theories? Here is a sampling:
Yes, Help to Buy is fuelling a property bubble (in London) - A columnist writing for The Daily Telegraph responded to a speech in June 2014 by the UK Chancellor of the Exchequer as he denied that London price inflation was driven by Help to Buy. The columnist basically said ‘balderdash’, that international investors are keenly aware of the scheme and that their purchasing of London properties was because they anticipated a price run-up. The columnist acknowledges that most use of Help to Buy is for purchases well below £600,000, the programme limit, and that foreigners are buying properties at lower price points (with cash, outside the scheme) because they expect a good return upon selling in the near future.
Actually, landlords are fuelling a property bubble - Another columnist writing for AOL Money/UK also acknowledges the programme’s success. But she says, "New stats by Intermediary Mortgage Lenders Association (IMLA) shows that while house prices are increasing to 2007 levels, mortgage activity remains well below that peak. The reason for this mismatch is because of the increasing number of cash buyers in the market. We know exactly where these cash buyers are coming from, there is hardly anyone who wants to buy a residential property to actually live in that can pay in cash - the people flooding the market are landlords or speculators hoping to make money."
Property bubble? What property bubble? - The Institute for Fiscal Studies looked at Help to Buy in exhaustive detail in early 2014. In its report, "Housing market trends and recent policies" (Daniel Chandler and Richard Disney), the researchers point out that an upturn in prices is not the same thing as a bubble - and they believe the speculative buying characteristic of bubbles is not appreciably present to deem it as such. "On balance, the data currently available do not provide clear evidence of a housing bubble, even in London - though the likelihood of a bubble is greatest there," say the study authors in summary.
Chandler and Disney go on to say the Help to Buy will likely cause a price rise, but that the effect this has on first-time buyers is a function of increased supply. Hence, the pressure is on the developers and homebuilders - and their financing, be it through banks, institutional investors or real asset funds - to build more homes.
Investors within the UK and elsewhere see the clear opportunity that the million-home deficit in the country presents. But individuals should always speak first with an independent financial advisor before taking a position in such an investment.
Add Comment
Investing / Finance Articles
1. How To Protect Your Crypto Wallet: Essential Tips Beyond PasswordsAuthor: Eldon Ryder
2. Ipo Grey Market Premium (gmp) Guide | Live & Upcoming Ipo Gmp Trends
Author: finowings
3. Top Benefits Of Enrolling In A Certificate Course In Banking
Author: sandeep
4. Crizac Ipo Gmp 2025: Key Dates, Price Band & Gmp Update
Author: finowings
5. Stock Market Advisory: The Growing Importance Of Professional Stock Advisory Services
Author: Vinay
6. What Is Sip And How Does It Help Build Wealth?
Author: Sagar Shah
7. Choosing The Right Accounting Firm In East And South Auckland: What You Need To Know
Author: WhizBiz
8. Goldco Review: Best Ira Guide For Investors, Retirement Planners, & Retirees
Author: Gold and Silver Investment News
9. Navigating Financial Growth With Avendus
Author: Drishti Desai
10. The 4 Types Of Income You Need For True Financial Freedom
Author: Wealth Samurai
11. Why Hyderabad Millennials Are Choosing Personal Loans Over Credit Cards
Author: anilsinhaanni
12. How A Retail Lending Specialist Can Help You Secure The Best Loan Deals
Author: sandeep
13. How Knee Replacement Improves Quality Of Life For Arthritis Patients
Author: uttam
14. Stock Market Advisory: Unlocking Investment Success With Share Market Advisory Services
Author: Vinay
15. The Rise Of Investment Banking Companies In Hyderabad’s Financial Scene
Author: Verity knowladge solutions