No - but the problem is the same. You have 5% downpayments (instead of 3.5% in the US), and mortgage-backed securities.
From my understanding, it appears there is NOT a government agency backing them, though. I don't think the 3.5% downpayment market be very big in the US if not for Fannie and Freddie (it basically doesn't exist outside of conventional loans Fannie & Freddie will buy).
I don't know how big the market is in the UK - maybe it's not much of an issue?
I'd love to hear from someone who knows more about this part of the UK market.
I don't think the 3.5% down payment market is very big.
>Between July 2019 and June 2020, the average down payment for a home amounted to 12% of the home value. In the first three months of 2021, 48% of home buyers made a down payment of at least 20% of the home value. 21% of home buyers in that same period made an all-cash purchase. [1]
It sounds like 69% are >= 20% down or all cash. I don't think enabling lower income access to housing is hurting our housing market at all.
A 3% increase in vacancy rate caused a ~10% decrease in apartment pricing in NYC [1].
Housing is very much at the margin and a small increase/decrease of demand will have an outsized effect on price. However, I'm not going to argue that everybody poorer than me shouldn't have access to a house just so I can get one at a cheaper price ...
> However, I'm not going to argue that everybody poorer than me shouldn't have access to a house just so I can get one at a cheaper price ...
What's wrong with renting? Why are poor people entitled to home ownership when most of the young middle class isn't? Why can't they rent?
There would be no problem with rent if home-ownership wasn't a massive handout from the government by guaranteeing that home prices appreciate more than interest rates. This is extremely unfair to poor people as it is currently - because they can't get in line to get massive amounts of free money. Best they can get is SNAP.
Meanwhile, your local millionaire is getting >$20k per year in asset subsidization.
I don't think that even more manipulation is the solution to the problem. If the government could get out of the business of pumping up house prices while keeping benefits like SNAP, that would go a long way toward fixing inequality.
There is/was a UK government "Help to Buy" scheme aimed at people who can only afford a 5% deposit, where the gov basically took part of the equity and then charged you rent on the portion you don't own. Never seemed like a good idea to me; just skews purchases to more expensive areas (ie London) and leaves the taxpayer with an even bigger share of the risk in the event of a house price crash. The only upside is political - the government gets to say they are helping first-time buyers.
