As the prospect of entering the housing market apparently becomes ever more distant for many first time buyers, fear not, Gordon Brown is here. To ensure the 2005 Pyramid House Price Scheme eventually hurts even more people when it finally collapses, the Government will help "selected" first time buyers by buying up to a 25% share in their new homes. If a bank does not "select" you for Government help, take your mortgage application to another bank that does.
The irony is that this scheme is coming just as house prices are already softening, favouring first time buyers for the first time in nearly a decade. Unfortunately, the scheme will stop this softening, subsidising current homeowner wealth rather than potential buyers as the scheme means buyers can now afford more expensive homes.
What will happen when the housing market finally turns and the Government wishes to get it's 25% equity stake in such house purchases back before the nominal value declines is not considered. Will it repossess the homes of voters who are unable to keep up the mortgage payments? Or will it just write the money off? It is only taxpayer money anyway.
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2 comments:
I'm taking up smoking so I can retire at 45!!
Steve, it's a one way bet for the prospective house owner. If the house price goes up, you will want to buy the Government share out eventually. If it goes down, let teh taxpayer lose their money!! It should also mean that the Government will have a vested interest in keeping house prices high.
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