House Prices set to Soar

House Prices set to Soar

Apologies for the Daily Express style headline but I need to get your attention.

Most people aren’t yet aware of the impact that “Help to Buy” will have. The Government’s new scheme to kick-start the housing market (and curry favour in time for the May 2015 General Election) will enable people to buy a home with just a 5% deposit from next January. A similar scheme applying only to new-build homes was introduced in January of this year. From next year the scheme applies to any property, up to £600,000.

Under the Help to Buy scheme the Government will act as Guarantor to the Banks for 20% of the purchase price, to give them confidence to lend.

There will be conditions – it won’t apply to second homes and Buy to Let for example – and credit scoring criteria will be quite demanding – but make no bones about it, Help to Buy is going to be very popular, especially with First Time Buyers. For 6 years now they’ve been patiently waiting in the queue. Each year that queue gets longer. There’s going to be a lot of government led propaganda, er sorry, publicity, about how they’re helping British Families. Prices have already started to move up and people will want to buy before they rise much further. Cue house price explosion.*

Of course Help to Buy isn’t just for First Time Buyers. It gives growing families the opportunity to move up the ladder even if they have limited equity.

Add the British obsession with property ownership and what other outcome than house prices soaring  can there be?

 

*House Price Explosion is really too extreme a term, but if prices correcting by 20% between October 2007 and February 2009 is called a House Price Crash then it seems the right phrase to use

By Richard Watters


Related posts:

Is The House Price Crash Over?
How Much Is My House Worth? (part 2)
Are We In A House Price Bubble?

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