You are scum: official

Via HPC, from The Spectator:

When people my age (I’m in my early twenties) hear that I work in Westminster there are two common reactions: either their eyes glaze over or I get an earful about uni fees, wages or once from an artist, during an otherwise pleasant dinner, an hour-long rant about cuts to the arts. But this time, Sam was excited by a politics that was speaking his language and a policy [Help To Buy] that would help him get out of the room he rents for £600 a month somewhere in Zone 2.

The scheme gives an incentive to save, keep a good credit rating and stay abreast of the news in politics and finance. This is a big shift for ‘Generation Rent’. Interest rates (and salaries) have been so low while we’ve been earners that there’s no been no point in saving, and when you’re not saving or paying a mortgage you’re unlikely to take an interest in the key issues that decide elections.

Surely, this change in attitudes should be welcomed and it presents an electoral advantage for the Conservatives. Renters are less likely to vote and they are less likely to vote Conservative.

With the usual Home-Owner-Ist dexterity, the author deftly conflates "savers" with "mortgage borrowers" as if their interests were aligned.

For a start, "saving" and "borrowing" are exact opposites, and the interests of the two groups are in fact directly opposed. Savers want high interest rates and low inflation and low house prices; borrowers (80% of borrowing is to buy land) want low interest rates and high inflation and high house prices.

And the author doesn't even dispute that interest rates and salaries are too low, or that rents and house prices are too high, but she is still cheerleading for a short term sticking plaster policy (Help To Buy) which will just make things worse.

The really depressing thing is that, according to YouGov (see page 4), half of people actually think this is a good policy.

"Quick! Pour more accelerant on the fire!"

Via Ennui at HPC.

It must be clear to everybody that the Conservatives' re-election hopes are largely pinned on stoking a nice house price bubble before 2015 to create the "feel good factor" which has been key to winning more or less every UK General Election for the past few decades.

But oh no, what's this?

The August data from Land Registry's House Price Index shows an annual price increase of 1.3% which takes the average property value in England and Wales to £164,654. The monthly change from July to August shows an increase of 0.1%...

The region in England and Wales which experienced the greatest increase in its average property value over the last 12 months is London with a movement of 7.1% and the North West experienced the greatest monthly rise with a movement of 1.3%. The region with the greatest annual price fall is the North East with a decrease of 2.2%. Wales saw the most significant monthly price fall with a decrease of 2.1%.

So their votes might be looking pretty safe in London/South East for the time being, but it's ebbing away elsewhere.

But fear not, help is at hand:

Polling since Mr Miliband’s speech last Tuesday suggests that his policies are popular with voters, who have seen their energy bills rise sharply, while average wages have stalled. Mr Cameron believes that too many young professionals are being priced out of the property market because they cannot raise enough money for a deposit.

The Help to Buy mortgage guarantee scheme will be brought forward from January 2014 to next week.

Under the three-year scheme, the Government will provide up to £12 billion of “guarantees” to encourage mortgage lenders to offer more loans worth 95 per cent of the price of a property. The government guarantees are needed to reassure banks and building societies because of the risk that mortgage holders with such high loan-to-value deals will default.

The scheme is expected to enable banks to release £130 billion of loans for buyers of properties worth up to £600,000 who could not raise a larger mortgage deposit on their own. A smaller government loan scheme for people buying newly built properties began in April.

To cut a long story, the very same people can't afford to scrape together a decent deposit on an over-priced house are being expected to be able to repay a mortgage on a house where the price has been pumped up by yet another fifteen per cent or so?

"Clegg and Alexander reject Cable's warning over Help to Buy"

From The Guardian:

Nick Clegg and Danny Alexander have dismissed a call by their Liberal Democrat colleague Vince Cable to restrict the second phase of the government's Help to Buy mortgage scheme to areas of the country with depressed property prices.

In a sign of tensions over the economic policy at senior levels of the party, Clegg and his close ally Alexander rejected Cable's warnings that Britain was facing a dangerous housing bubble.

Does not compute.

The justification for Help To Buy was that houses are too expensive and so first time buyers have to be "helped". The very existence of the scheme is the government's tacit admission that house prices are in a bubble.

If prices were "affordable" by whatever measure, then there'd be no need for such schemes. So Cable's idea about restricting it to "areas of the country with depressed property prices" is even more stupid than Clegg and Alexander's state of denial - because people don't need help to buy a cheap house.

The only way that any of this makes sense is if "Help To Buy" is in fact "Help To Sell", then it makes perfect sense from the point of view of a Home-Owner-Ist government trying to win a general election from a majority Home-Owner-Ist electorate.

H/t Alan at HPC.