NewBuy, housing minister Grant Shapps and co were telling us, is set to repair the ’broken’ first rung on the property ladder. This, of course, is a lot of old tosh. These types of schemes are great in theory, but amount to very little in practice.
The bottom line is that the property market will come back when it is ready to come back — schemes like NewBuy are mere tinkering around the edges. If the government thinks this scheme will kickstart the property market then it is in cloud cuckoo land.
One concern of mine is that NewBuy is intrinsically leveraged, and we know where leveraging got us in the past. It’s kicking the can down the road once again.
Through NewBuy, people can get onto the ladder now, but they’re doing so at very high LTVs. Is that what a government should be encouraging?
We all want to see more people owning their own homes but the values of conservatism should not be superimposed on the forces of the market. And that’s what I feel is happening here.
In my opinion, people should buy when they are genuinely in a robust position to do so, not because a bank, backed by a government with an agenda, says they can buy.
Contrary it may be, but sometimes if something is broken, don’t fix it. If we are to have a strong property market in the long term, we should avoid quick fixes in the short term.