Property Matters is our weekly look at the current big 'matters' in property.
In this programme Stephen discusses the potential issues with the stamp duty holiday & help to buy.
Topics that are discussed:
- Inflation in house prices
- The stamp duty holiday
- Help to buy
Stephen Galpin is a highly regarded corporate property consultant, justice of the peace and Freeman of the City of London.
Things aren't looking quite as bad as we thought. We go back to 2014 and we had 20% per annum inflation on house prices. This year, across the board, it's something like 4% averaged. 6% odd in the North of England where prices are lower and demand seems to be a little bit higher, and in the South of England between 1% and 2%, but that's fine. What we don't want to see is 20% inflation running across the board each and every year, it's too much. It makes housing totally unaffordable, unattainable by our young people. We need to establish a rate regime that will make houses affordable, it'll make house ownership worthwhile by steady, upward inflation over the years. A little inflation is not bad. It gives the average working man, a chance to make a little bit of money and progress on in their family lives.
Now, what I do worry about is when we have a stamp duty holiday. It causes a false rush to buy within a set period of time, that in itself causes inflation. Now, the same thing is true of the help to buy scheme. Now, the help to buy scheme again is going to be extended by another month or two to help young people get on the ladder. Now, effectively help to buy means that you can buy on a fairly low deposit, i.e 5% with a 20% loan from the government. Not so keen on this, not really so keen because it actually puts that person just in debt, it postpones the evil day. Now, I do understand it helps those that have got a minimum deposit. It does help them buy get on the ladder. But what would be wrong with just letting them have a higher level mortgage in the first place? It would cut out that debt, cut out the warriors you had towards the five years and you've got to repay it.
I worry about it in the same way that I worried about when we had this spate of co-ownership, which was extremely popular. You could buy half of your home and rent the other half and gradually get it together like that. But what happened was we had a high level of keys being handed in. People couldn't afford the mortgage and the rent was so it caused problems. I think creating false situations, creating false opportunities to buy is not a clever idea. As I said, we need steady considered growth in the housing market that will go hand in hand with supply developers.
I've always said on this program, will always build what we need, if indeed they know they can sell it. So I think with those two things being eked out, put in the right place, running for some considerable length of time, it could really help. I don't like these false dawns, these cliff edge dates by which things must be done. I think it's dangerous, I think it causes panic, and I think it pushes people into buying things that they may not really be able to afford.
Now, the property market is difficult at the moment. What are we going to see for 21, 22? Well, I just hope for steady growth. I hope that by the summer we are out of all these lockdown problems and people can get out and about, decide what their future is in terms of work and their employment prospects, and make considered purchases ready for moving on to 22, 23 and beyond. So there we are. That's my hope. That's my prediction. And let's hope we can all move forward to a safer, more prosperous housing market in the future.
See you next time.