In another depressing read for us first-time buyers looking to get onto the property ladder, Peter Temple of Interactive Investor has written an interesting article on the reasons why recently proposed ideas for helping first-time buyers are unlikely to work.
Two proposed ideas:
- Build lots of new houses (it’s just a question of supply and demand, right?!)
- Encourage first-time buyers to use a shared equity scheme, whereby buyers purchase part of the property and rent the rest off the government/banks.
Temple argues that the houses would firstly have to be built in the areas that they are needed, such as in the city, not on the outskirts, especially in order to benefit the “key workers”, which often find it hardest to buy a first house. Also what is stopping buy-to-letters simply snapping up these new houses once they come on the market? And providing shared equity schemes could simply have the effect of increasing the prices that first-time buyers have to pay – another vicious circle.
Temple explains what he sees as the various reasons that we are in this situation:
…the roots of the present crisis in affordable housing lie much deeper. They lie in Margaret Thatcher’s right-to-buy policy for council tenants; in the wholesale deregulation of the mortgage market; in the inflated multiples of income that building societies and banks now lend; in the persistently low interest rates; in the egregiously high salaries and bonuses in the City; and in a loose money supply and disenchantment with the stock market.
Read the full article: Throwing cash at first time buyers is no answer