Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
Is a Stock Market Crash Imminent or Does this Stock Market Bull Still Have Legs - 25th Apr 18
Gold Price Focusing on May Cycle Bottom - 25th Apr 18
Cash “Vanishes” From Bank Accounts In Ireland - 25th Apr 18
Is the Malaysian Economy a Potemkin Village - 25th Apr 18
Land Rover Discovery Sport Rattling / Knocking Sounds From Car Pillars - 25th Apr 18
China Takes the Long View on Gold-Silver... and So Should You - 25th Apr 18
Russia Buys 300,000 Ounces Of Gold In March – Nears 2,000 Tons In Gold Reserves - 24th Apr 18
Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - 24th Apr 18
CRYPTOCURRENCY MASTERCLASS #CRY90 - 24th Apr 18
UK Gambling Statistics - What the Numbers Say - 24th Apr 18
Chaos Capitalists Short Countries - How Chanos Got China Wrong - 24th Apr
Artificial Intelligence Defines the Political News Narrative - 24th Apr 18
Stock Market "Oops, They Did It Again" - 24th Apr 18
Fox in the Henhouse: Why Interest Rates Are Rising - 23rd Apr 18
Stocks and Bonds, This is Not a Market - 23rd Apr 18
Happy Anniversary Silver Investors! - 23rd Apr 18
The Hottest Commodity Play In 2018 - 23rd Apr 18
Stock Market Correction Turns Consolidation - 23rd Apr 18
Silver Squeeze, Gold Fails & GDX Breadth - 23rd Apr 18
US Economy Is Cooked, the Growth Cycle has Peaked - 23rd Apr 18
Inflation, With a Shelf Life - 23rd Apr 18 - Gary_Tanashian
Stock Market Predictive Modeling Is Calling For A Continued Rally - 22nd Apr 18
SWEATCOIN - Get PAID to WALK! Incentive to Burn Fat and Lose Weight - Review - 22nd Apr 18
Sheffield Local Elections 2018 Forecast Results - 22nd Apr 18
How Long Does it take for a 10%+ Stock Market Correction to Make New Highs - 21st Apr 18
Sheffield Ruling Labour Party Could Lose 10 Council Seats at May Local Elections - 21st Apr 18
Crude Oil Price Trend Forecast - Saudi Arabia $80 ARAMCO Stock IPO Target - 21st Apr 18
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

David Cameron Brings Forward Help to Buy Mortgages, Stoking House Prices Bubble, Election Boom

Housing-Market / UK Housing Sep 29, 2013 - 04:01 AM GMT

By: Nadeem_Walayat

Housing-Market

The coalition government is ramping up its efforts for not just igniting economic recovery but an election boom as David Cameron announces that the Help to Buy Scheme which was due to be extended to all house purchases upto £600k from January 1st 2014, will instead now commence this coming week. This is a clear case of actions speaking louder than words for literally just days ago George Osbourne was issuing statements that he wanted the Bank of England to step in to prevent a housing bubble, we even had the likes of Vince Cable calling on the 2nd phase of Help to Buy to be scrapped, instead the Coalition governments ACTIONS for over a year have been one of escalating efforts towards stoking a house prices bubble in an attempt at igniting an ELECTION BOOM, an election that could come much earlier than the consensus expects.


The Conservative strategy is clearly to go for broke, to maximise economic growth and the 'feel food factor' for this will give David Cameron an additional option of attempting to win an outright majority by going for an EARLIER election than May 2015, as I suggested several weeks ago (Army of Estate Agents Recruited for UK House Prices Boom, Election May 2014? ), that the election could come as early as May 2014.

When house prices boom so does the ECONOMY! George Osbourne appears not to be taking any chances as he is well ahead of schedule for an May 2015 election economic boom that is still near 2 years away. Which raises the question, could the next general election come a year earlier? Is that the Conservative secret plan for a May 2014 election? For that is what is implied by an imminent housing market boom that will feed into an economic boom going into Mid 2014!

The Help to Buy Scheme announced in the March 2013 budget consequences are one of creating a UK subprime mortgage market by means of the government loaning upto 20% (£120k) for first new builds and now any property upto a value of £600k. What this means is home buyers ONLY need a £30k deposit to BUY a £600k property at an LTV of 75%. Before Help to Buy, buyers with a 30k deposit could only afford to buy a £120k property! Therefore the EFFECT of Help to Buy is of a monumental boost to UK house price inflation, as this quadruples the amount of debt home buyers can take on.

It's not rocket science, it's actually quite simple: Limited Supply + Quadruple Demand = House Prices Boom!

20 Mar 2013 - George Osborne Boosts UK Subprime Housing Market Ahead of Election Boom

Creating a UK Subprime Housing Bubble

The chancellors announcement of £130 billion mortgage guarantees effectively amounts to seeking to ultimately create a UK version of U.S. Fannie Mae and Freddie Mac that will eventually blow up in spectacular style as more and more house buying voters expect to be bribed at each election and therefore the £130 billion will mushroom to one day stand at well over £1 trillion of liabilities, off course the bust will come AFTER the next housing boom, so this and the next government need not worry themselves for the consequences of creating a UK subprime housing bubble as the consequences of which tax payers will be liable for in a decade or so's time which means another financial crisis as this repeats the SAME mistakes of mortgage backed securities i.e. the lenders are not liable for the risks so can take on more risky loans for commission as the liabilities will be with tax payers.

This scheme will be extended from the 1st of Jan 2014 to allow prospective home buyers to buy ANY property (not just new builds) with the government financing 20% of a deposit upto £600k, or £120k of tax payer money going towards EACH prospective buyers home purchase, which EFFECTS market sentiment in the PRESENT.

This was proceeded by a string of housing market boosting measures and trend change indicators:

06 Sep 2012 - Super Mario Draghi Triggers Stocks Stealth Bull Market Rallies to New Bull Market Highs

This years convergence towards housing market bottoms such as the UK and US presenting one of those once in a couple of decades opportunities to climb aboard what still are embryonic bull markets, just as I strongly suggested the birth of a new multi-year stocks stealth bull market in March 2009

08 Sep 2012 - UK Home Extension Planning Rules Relaxed to Boost Economy, Trigger Housing Bull Market

I am continuing to see positive signs towards a multi-year bull market, so I am giving you another head start on an emerging probable multi-year bull market in UK housing.

The announcement was followed by further government measures that would boost sentiment long before the policies would be implemented in any significant number such as George Osbourne's March budget announcement to effectively create a UK subprime mortgage market by paying 20% of the deposit on first new builds and from 1st of January 2014 all properties upto a value of £600k.

My most recent analysis of Mid August 2013 ( UK House Prices Bull Market Soaring Momentum, 10% Inflation by October? ) concluded in an expectation for UK House prices to be rising by more than 10% per annum on release of October 2013 data in November and by 12% per annum for January 2014 data, with further expectations for 10%+ price momentum to continue into at least mid 2014 as illustrated by the below graph.

And as illustrated by this recent video -

The strategy in bringing forward of the Help to Buy Scheme for all properties is clearly aimed at building on housing market sentiment towards a trend trajectory of average UK house prices rising at a rate of at least 10% per annum, which is precisely inline with my forecast momentum for UK house prices to be rising by 10% per annum as of October 2014 data, and all the way into Mid 2014.

Whilst the new bull market of 2013 morphs into the raging bull market of 2014, I can imagine many house hunters waiting to buy will now be hoping that the effect of the Help to Buy scheme on house prices will be short-lived, however know this that my long standing expectations remain for THIS bull market to last for the remainder of this decade. Ensure you are subscribed to my always FREE newsletter as my in-depth analysis resolves towards a detailed trend forecast for many years beyond Mid 2014.

Yours analyst waiting for the PANIC Buying headlines in the mainstream press. Forget under offers, it's offers OVER for an increasing number of areas of the country as I warned several weeks ago - Final Warning UK House Prices Boom Imminent!

The bottom line is to take this as your final warning for a UK house prices boom as those waiting on the sidelines have only a matter of weeks to act before housing market sentiment responds to a market that is rising at a rate of more than 10% per annum. The days of under offering for good houses in good locations is about to end

The bottom line is this remember to IGNORE what spouts from the mouths of ALL politicians, instead LOOK at their ACTIONS! And the mainstream press will ALWAYS be several years BEHIND the curve, after all they are just journalists, not analysts, not traders, not investors, not speculators, Just Journalists who think they are economists (pseudo-economists), without understanding that economics is nothing more than political propaganda, for more subscribe (it's FREE).

Source and Comments: http://www.marketoracle.co.uk/Article42474.html

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2013 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of four ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series.that can be downloaded for Free.

The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules