From the BBC's Budget write-up:
Chancellor Alistair Darling has axed stamp duty on house sales under £250,000 for first-time buyers paid for by a rise in duty on homes over £1m... the planned cut in stamp duty would stay in place whoever wins the election, as it is similar to existing Tory policy.
So this all to help the 'first-time buyer', is it? Doesn't that pre-suppose that sellers won't just hike their prices by one per cent to match? (And it's a nice bit of Indian Bicycle Marketing).
Even The Daily Mail sees it that way:
Labour will be desperate to avoid signs of another collapse in house prices in the run up to the general election, expected in May, and a stamp duty cut - reported last night by the BBC - would be an ideal way of propping up the market.
I don't like Stamp Duty Land Tax, like most land or property taxes, it is almost deliberately badly designed, it's as if they were trying to bring such taxes into disrepute (a weird mixture of Poll Taxes, transaction taxes and jealousy surcharges), but the only people who'll benefit from this are people who sell up in the near future. If I were in the market for a house - oh, I am - then I'd rather wait another year or two, as prices are set to fall by considerably more than one per cent.
No wonder he's never around
9 minutes ago
2 comments:
I love the idea that some pundits are pushing that 'house prices will gently trend downwards over the next few years' as they adjust back to trend gowth.
Like fuck they will. Markets hardly ever work like that. Once the participants realise that the prices are starting to slide they start getting desparate to sell hence accelarating the price decline.
Darling Brown Balls is right though. Keeping the house prices afloat with QE has to be good for his chances with all the homeownerist phantasists out there.
Lola,
Never listen to TV pundits on anything. They just don't do the level of analysis that people who've been involved in the specialist areas have.
The #1 thing about the housing market is how much of it is "bubble" and the effects of that.
FTBs partly buy because of fear of not getting on "the ladder". They may not necessarily even want a house at that moment, but that fear will drive them into buying earlier. Once they realise that no-one else is rushing to get houses, the panic wears off.
Likewise buy-to-let people. Most of them didn't just see the rental income as a benefit. They also saw the capital increase as beneficial (and right now, of course, they're seeing that going down).
It's why prices will actually get very cheap in a few years. They'll have to fall so low that people will look at prices and see that they're getting a bargain at the price and "confidence" will start to return.
My guess on the housing market? It hasn't bottomed out yet. How far from the bottom it is, I don't know.
Using Nationwide's HPI, Q2 2007 to Q2 2009 has seen a drop of 15%. Q2 1989 to Q2 1994 was a drop of 17.48%. So our drop isn't even at 90s decline yet, and my instinct tells me that the 2000s boom was even larger than the 90s one, so needs to fall more than 17.48% (my guess is it will fall by as much as 20%).
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