Help to Buy: A moronic policy

In the  words of a leading City figure: "I believe it truly is a moronic policy that stands head and shoulders above most of the stupid economic policies I have seen implemented during my 30 years in this business.".

Help to Buy should really be called ‘Help to Sell’, as the main ‘winners’ will be developers and existing homeowners who will find it easier to sell at inflated prices. Pumping more money into a housing market with chronic under-supply has one sure-fire outcome: pushing up house prices. At best it may help a small number of new buyers, but it will mean housing becomes more expensive for all those that follow.

The major problem faced by first time buyers is high prices and the daunting levels of debt needed to enter homeownership. Of all the policies you could think of to tackle this, it is harder to think of a riskier or more short termist policy than Help to Buy.

House prices across much of the UK are already unaffordable for young adults and families with ordinary earnings, so this extra upward pressure on prices will create far bigger problems in the future.

If the government is happy to take on exposure to the housing market, it would be much wiser to invest directly in building more houses, with the focus on targeting areas with the most chronic housing shortages.

Affordable homes?

Ross Clark, author of A Broom Cupboard of One's Own, looks at how a typical 1930s-build semi-detached home in Mitcham, south London would cost £18,000 to £30,000 at today's prices allowing for general inflation, but it is more likely to be on the market for £330,000.

English Housing Survey

The recently released English Housing Survey  makes grim reading for anyone who wants to promote home ownership. 

Owner occupiers are decreasing while private renting is increasing. It's clear that the Buy to Let investors/amateurs are pushing FTBs out of the way and trapping them in a life of renting, whether they want to or not.

Mark Prisk Answers Questions

Mark Prisk (Housing Miinister) recently answered questions on the housing crisis. You can read the article here.

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Shocking facts

• "(the industry) chooses not to build, hoarding its scarce land bank with the aim of building when prices are better" FT leader 8 Sep 2012
• "number of new houses built lowest since 1929" Daily Telegraph 22 Dec 2012
• 1 million children in Britain suffer from bad housing…. (Shelter)
• 1 million ‘targeted’ houses remain unbuilt since 2003 (projected from Barker 2003 Housing Review)
• 2.5 million increase in population since 2003 (ONS figures)
• 1 million homes overcrowded (Guardian 24 Dec Analysis of latest census data)
• 1 million surplus house sites are accumulating profits in plc builders’ land banks (ex Barker projected)
• 1 million pony-paddock acres are surplus to UK agricultural needs.