Is the Help to Buy scheme good for the market? The purpose is clearly to stimulate demand — albeit artificially through a temporary measure designed to make borrowing easier.
However, while volumes are still much lower than the pre-2008 status quo, there appears to be a natural recovery underway anyway.
In any event, what is the motivation here? Is it to assist the recovery or is it to win votes? Call me old fashioned but stoking the volumes ahead of a May 2014 2014 may not have our interests at heart.
Moreover, when governments interfere in markets they usually mess up. What we want is a sustained — and sustainable recovery. What we don’t want is unnecessary volatility — a spike in activity followed by an equal and opposite reaction.
This happened way back in 1988 with the government announced that Double Income Tax Relief would end in six months at on August 31st. An already overheating market was artificially spiked as first time buyers rushed to purchase before the deadline. On the 1st September the market fell off the proverbial cliff and there was a property recession for five years.
The market in 2013 has not been overheating like in 1988 — volumes are still way below the pre-2008 status quo. So while I don’t think we are going to fall off a cliff post-Help to Buy; I don’t see this artificial spiking as particularly helpful in re-building operational capacities. We need sustained and sustainable volumes so that these capacities can grow and grow — rather than grow, contract and grow.
Anyway, weren’t the politicians saying that they wanted to end this volatility in markets (“no more boom and bust in the property market” was the rhetoric I believe”)?
On the subject of public sector involvement in markets — there are rumblings at Land Registry that they will enter the local authority search market.
It is as clear as mud at the moment what their plans are — will they be a hub or or a channel? Or both? The motivation appears to be to engineer a more efficient search market. Their recent track record with e-conveyancing suggests that they may mess up through a lack of understanding of how the market works.
In addition, there is a real danger that strengthening the public sector’s control of local authority searches risks restricting competition and stifling market forces. It risks a return to an inefficient and over-priced service that caused me to enter the market as the very first private search provider back in 1983.
The Land Registry needs to be less inscrutable on their plans and allow themselves to be guided by the existing market expertise and experience available to them in the marketplace. This does not mean Consultation that seeks to confirm their thinking through pre-set question — they need to know what questions they should be asking.
It is possible that, together, the Land Registry and the search companies could build a an efficient search delivery infrastructure while stimulating the essential competition for a healthy market. It would be great to hear from Land Registry on this.
I am currently involved in a consultancy project for the New Zealand Government on the viability of creating an online property information service. I think they asked me because of my involvement in SearchFlow and NLIS. I ended up writing a critique — a retrospective look at how it unfolded. They were particularly interested in what I would have done differently with the benefit of hindsight. And there was a lot in relation to NLIS. Why isn’t Land Registry asking this question?