‘It has the potential to be positive but is more likely to be a damp squib’. These were the general sentiments of the panel at the HSBC Great Housing Market Debate today in speaking about the government’s latest market boosting effort, Help to Buy.
Chaired by John Wriglesworth, key speakers in the debate were Campbell Robb, CEO of Shelter, Grenville Turner, CEO of Countrywide, Nigel Terrington, CEO of Paragon, David Smith, economics editor at The Sunday Times and Peter Dockar, head of mortgages at HSBC.
There was great support for Robb, head of the housing and homelessness Charity, Shelter, when he said that the government was “putting all its eggs in one basket” and that the government’s various housing schemes were “potentially helpful, for a relatively small number of people.”
“It doesn’t change the market and will leave us back in the same position needing houses built and mortgages available to the majority, not a minority.”
Referring specifically to the Help to Buy, Robb said the government had chosen to invest in more products that fail to deliver the amount of mortgages promised.
“It won’t solve the crisis. It will help a small number but won’t game change. If the best we can say is that it (Help to Buy) is a damp squib, it’s not enough.”
Turner, however, believes that the UK finally has a housing minister who understands the issues of the market and is realistic, in the form of Mark Prisk.
“The equity loan side (which helps people who want to buy a new property) is immediately impacting. From that perspective we will start to see results as positive in line with the government expectations. The combined affect is positive.”
David Smith commented that the deposit guarantees element of the scheme was “interesting” but that the chancellor George Osborne should have ironed out the details and spoken to lenders before announcing it in the budget.
“We need to look at net lending and see what difference £130 billion of guaranteed mortgages will make. It’s not big enough to sustain a house price boom.”
However, he believes that it’s good that time is limited on the programme and that the spirit of the scheme is intended for first-time buyers and first movers.
On the topic of movers, the general consensus among the audience, when queried by John Wriglesworth, was that Help to Buy should be targeted solely at first-time buyers and not at second-steppers.
In terms of new housing starts, the general belief was that the average per annum will remain static and will not rise above 120,000 in the next five years and that it will take up to four years before the yearly level of housing transactions rises above the million mark.
On a brighter note it’s believed that lower LTV levels in the current market would contribute to some level of growth but that house-building is crucial to recovery.
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