The Government’s 95% mortgage scheme, due to kick in next January in the second phase of the Help to Buy programme, will send house prices soaring.
The Centre for Economics and Business Research says house prices will overtake their pre-recession peak next year.
The economic consultancy predicts the £130bn lending scheme will add more than £1,000 to the price of a property next year alone, and that by 2018, the average price of a home will be £267,000.
From next January, borrowers with only a 5% deposit will be able to get a mortgage, with the Treasury guaranteeing to the lender 15% of the loan. The scheme will be available on both new and secondhand homes.
CBRE economist Daniel Solomon, author of the report, said: “By 2018, we expect the typical UK home will cost £267,000 – over 20% more than this year.
“We expect the Chancellor’s new Help to Buy scheme will push up house prices before it raises housing supply.”
The CBRE report is the latest warning that Chancellor George Osborne’s scheme, unveiled in last month’s Budget, will create a new house market bubble. Help to Buy has been dubbed a government-backed sub-prime mortgage scheme.
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Comments
The scheme only applies to new build property, so where this article gets the information on second hand homes from, I have no idea.
The Government is very clear on the issue here:
http://www.hm-treasury.gov.uk/10012.htm
So the chances of a rise in existing stock are slim. If anything, it will damped house price rises at the bottom of the market on existing stock since any buyer will be able to spend 20% more on a new build.
Moreover, the scheme is already available - the part due to kick in in January is the mortgage underwriting from the Government for lenders.
So what do people do - ? They will wait until next January and EXACTLY the same but in reverse will happen to the market as happened when double tax releif was withdrawn. That time the sales were just about nil. This time the run up will be just about nil sales so I hope you all have deep pockets and long arms to be able to survive the next few months and look out in January as you may have one or two sales to deal with and if prices start to rise............
Good piont, I should have read the story, thanks.
Casio
Casio
Help to Buy is not just about new builds. It is about the whole of the market. Come next January, Help to Buy will mean that purchasers can get 95% mortgages on ALL types of properties of any age. My guess is that this will have very little impact on new homes and a great deal of impact on estate agency stock. Don't be distracted by thinking New Buy is st about new builds, because it isn't.
Only new builds, flawed scheme, add nothing to rest of market, worse takes away.
OK I'm going to comment here by leaving a link to a guest post in our blog recently submitted by Councillor David Brickhill of Chester east.
If you think this scheme is in place to help with a housing shortage and to get the market moving again, you should probably read what he has to say.
http://www.findersandsellers.com/wordpress/?p=2664
Its the CEBR reporting,each year they do 3-4 reports saying house prices are going to shoot up and they were wrong.
Last year they had to downgrade their previous forecast predictions as they were ridiculously wrong, expect them to do it again.
The CEBR are nothing more than a building company lobby group, ijnore them.