Most Popular
1. Dow Max Drawdown Bear Stock Market 2022 - Accumulating Deviations from the Highs - 21st Feb 22
2.Putin Starts WW3 in Ukraine, Will Use Tactical Nuclear Weapons, China Prepares Taiwan Blitzkrieg - 28th Feb 22
3.World War 3 Phase 1 - Putin WINS Ukraine War! - 25th Feb 22
4.INVESTORS SEDUCED by CNBC and the STOCK CHARTS COMPLETELY MISS the BIG PICTURE! - 10th Feb 22
5.Will There Be A 2024 US Presidential Election? - 3rd Mar 22
6.Gold and SIlver, Precious Metals Sector Is at a Terrific Buy Spot - 6th Feb 22
7.Why Putin Wants the WHOLE of Ukraine - World War 3 Untended Consequences - 6th Feb 22
8.Dow Stock Market Expected Max Drawdown 2022 - 19th Feb 22
9.Stock Market Calm In the Eye of the Inflation Storm - 4th Mar 22
10.M = F - Everything is Waving! Stock Market Forward Guidance - 7th Mar 22
Last 7 days
How Low Could the Amazon (AMZN) Stock Price Fall? - 19th May 22
Bitten by FANG? Clocked by Cryptos? -- 'Air Pockets' Everywhere - 19th May 22
Northern General Hospital Orthopedics Fractures and and Ankle Clinic Consultations Real Patient Experience - 19th May 22
Cathie Wood Goes All in on Teladoc, ARKK INSANE Noob Investing Strategy! - 17th May 22
This is Anything but Positive for US Housing Market - 17th May 22
What Should We Do If There Is No Fed Monetary Policy Pivot? - 17th May 22
All Possible Ways to Earn Free Litecoin - 17th May 22
How low Could the Amazon Stock Price Fall? - 16th May 22
Cathy Wood ARKK INSANITY There is NO Coming Back! - 16th May 22
NASDAQ 100 Stock Market LOWER LOWS & LOWER HIGH - 16th May 22
Sanctions, trade wars worsen US inflation - 16th May 22
AI Tech Stocks Earnings BloodBath Buying Opportunity - 14th May 22
Futures Contract – Trading Crude Oil With USO - 14th May 22
How to Get Kaspersky Internet Security for 80% Discount! Do not Pay Renewal Price! - 14th May 22
Sagittarius A* Super Massive Black Hole Monster at Centre of Our Galaxy REVEALED! - 14th May 22
UK Public Debt Smoking Inflation Gun - 13th May 22
What Happens When the Stock Market Dip Keeps Dipping? - 13th May 22
Biden Seeks Inflation Scapegoats; Gold Advocate Wins GOP Primary - 13th May 22
Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - 12th May 22
The War on Gold Ensures the Dollar’s Downfall - 12th May 22
Crypto Investors Stable Coins TERROR as Terra USD COLLAPSEs towards ZERO, Tether Next! - 11th May 22
INFLATION IS KILLING SILVER - 11th May 22
The Dominant Investing Theme of the Decade - 11th May 22
Is Bitcoin Headed to Zero? - 11th May 22
RECESSION RISKS 2023 - 10th May 22
The Future of the Dollar Seems So Bright It’s Blinding Gold - 10th May 22
Take Advantage When Markets Succumb to Fear - 10th May 22
How to Recognize a Less\ Than Obvious Opportunity (In focus: Corn) - 10th May 22
How to Ensure Financial Stability for Your Family - 10th May 22
The Stocks Stealth BEAR Market - 9th May 22
A Strengthening US Dollar Is A Double-Edged Sword - 9th May 22
Making Wise Investment Decisions - 9th May 22
Ways to legalize a Moving Company - 9th May 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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

© 2005-2019 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