Should governments stop meddling in property markets?

Discussion in 'General Property Investment Discussion' started by totallyproperty, Nov 16, 2013.

  1. totallyproperty

    totallyproperty Administrator Staff Member

    The UK government has come in for significant criticism after launching the Help to Buy scheme which guarantees part of a mortgage for an array of first-time buyers and those looking to either upgrade or downsize. Is it fair for governments to involve themselves in property market funding or does this raise suspicions that they are doing this for political reasons?
  2. Ed_P

    Ed_P Member

    I believe it does raise suspicions that they are doing something for political reasons, but I don't see how getting help to get onto the property ladder could be considered a bad thing.

    I saw the help to buy offer as a way of encouraging people who otherwise couldn't, to get onto the property ladder which will then fuel the economy? This in turn then helps the government.. Or do you believe there is something more sinister and damaging in the long-term?

  3. totallyproperty

    totallyproperty Administrator Staff Member

    Hi Ed

    If I was a cynic I would perhaps suggest the government is looking for a short-term improvement in property prices, looking to help as many people on to the housing ladder as possible which could potentially store up major problems for the future. The more funding made available in the short term the higher UK house prices will move and then, when the funding stops, future UK first-time buyers will be left high and dry.

    I may be wrong, but I believe that history shows that the current government and previous governments have all manipulated the property market so that there were always fewer new properties being developed compared to demand. Or am I just being cynical?

  4. calgaryalberta33

    calgaryalberta33 New Member

    I don't see how getting help to get onto the property ladder could be considered a bad thing.
  5. jessbarkerresearch

    jessbarkerresearch New Member

    I can speak from the stand point of an American, whose governments has been involving itself or "meddling" in the acquisitions of property for a long time. I think the question is more complicated, because in the US, the process worked for a long time and people were given the chance to own their home with low interest rates, ie the 30 year mortgage. However, the problem spurring the Great Recession happened in part due to government intervention (giving loans to people who couldn't really afford them, but it was coupled with the extreme deregulation of the private mortgage market. The government had issues supervising the process of banks giving out bad loans and weren't a proper safeguard. I think government can be a great tool to level the property playing field, but public and private must work successfully together.
  6. totallyproperty

    totallyproperty Administrator Staff Member

    I agree, the great recession was caused by governments, regulators and banking institutions taking their eye off the ball - trying to squeeze the last dollar from a US property market which was overheating and over valued at the time.

    My main concern in the UK is the greater rate of growth in property prices compared to household incomes which is pricing more and more potential first time buyers out of the market. The Help to Buy scheme will be a big help in the short term but it will end and what happens then?

    JAMES TANNER 007 New Member

    I agree and disagree with some of these posts.
    Governments, however they come across to the general public, will always have a hidden agenda. In the case of the tories/Lib Dems coalition, it may be as simple as vying for votes at the next general election-lets face it, they need some! I can't see any other 'gain' for them to get by doing this.
    But, as property prices are astronomical in England at the moment and many 25-40 year old people still live with their parents because of the ridiculous prices, then I think this is a very good thing, can't do any harm.
  8. Wesley Lorn

    Wesley Lorn New Member

    A healthy market is one that is allowed to rise and fall thereby establishing its own long-term trend. The role of government should be to provide equal opportunity for all and not target policy initiatives on a select few.

Share This Page