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Government Shot Themselves In The Foot


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The thing that bugs me the most about current house prices is the way that they have artificially been supported by explicit government policy over the last few years.

You can see why the government would want to avoid house price falls

1) with an election coming up they want the British home-owner to keep the 'feel good' factor of living in a valuable house and therefore vote to the status quo.

2) they needed to protect the the banks from the consequences of lower asset values. This would have had a further effect on bank's willingness to lend and through this the economy as a whole including people's jobs and therefore people's votes.

( 3) a skeptic would say that they needed time to sell their own BTL empires :ph34r: )

However as I thought about this it occurred to me that they have also shot themselves in the foot with this policy. The volume of transactions has crashed and this must have had a big effect on government revenue from stamp duty ect. Does anybody know how much government revenue came from housing transactions?

I expect that the political will to support high house prices will vanish after the election. Whoever wins they will not need to face another election for a few years. They will also face a massive squeeze on state finances and therefore will probably want to get transaction volume (and the government revenue it generates) back up again.

I am hoping that the next few months will see a massive shift in government policy towards the housing market, whoever wins. From 'stop prices falling at all costs' to 'get tax revenue from the housing market'. This will cause an increase in sales volume and, I'm hoping, a decrease in prices.

What do you guys recon?

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What do you guys recon?

The govt. doesn't have much say Ben.

The 'shadow elite', or whatever title you want to bestow upon they who control your life, I think are watching the show with mild interest & will continue with the experiment for as long as it suits them.

One thing is for sure, morality has nothing to do with it.

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The govt. doesn't have much say Ben.

The 'shadow elite', or whatever title you want to bestow upon they who control your life, I think are watching the show with mild interest & will continue with the experiment for as long as it suits them.

One thing is for sure, morality has nothing to do with it.

I think that direct government intervention has had a massive say in what has (or more acurately hasn't) happened to house prices over the last few years.

btw there is no such thing as the 'shadowy elites' (unless you are talking about Mandleson), you are free to get on with the rest of your life without fear. ;)

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Ben,

Most government revenue comes from 3 taxes - namely Income, NI and VAT - Revenue from stamp duty, although it has obviously dropped, is small beer in comparison to the big 3. The following link gives you the full breakdown over the last few years - interesting to see overall revenues falling. The UK is completely and utterly stuffed!!!

http://www.hmrc.gov.uk/stats/tax_receipts/table1-2.pdf

Cheers

Python

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Ben,

Most government revenue comes from 3 taxes - namely Income, NI and VAT - Revenue from stamp duty, although it has obviously dropped, is small beer in comparison to the big 3. The following link gives you the full breakdown over the last few years - interesting to see overall revenues falling. The UK is completely and utterly stuffed!!!

http://www.hmrc.gov.uk/stats/tax_receipts/table1-2.pdf

Cheers

Python

Thanks for that Python and welcome.

Stamp Duty is down by 1/2, but as you rightly point out the figures are small fry compared to other sources of revenue.

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The thing that bugs me the most about current house prices is the way that they have artificially been supported by explicit government policy over the last few years.

You can see why the government would want to avoid house price falls

1) with an election coming up they want the British home-owner to keep the 'feel good' factor of living in a valuable house and therefore vote to the status quo.

2) they needed to protect the the banks from the consequences of lower asset values. This would have had a further effect on bank's willingness to lend and through this the economy as a whole including people's jobs and therefore people's votes.

( 3) a skeptic would say that they needed time to sell their own BTL empires ph34r.gif )

However as I thought about this it occurred to me that they have also shot themselves in the foot with this policy. The volume of transactions has crashed and this must have had a big effect on government revenue from stamp duty ect. Does anybody know how much government revenue came from housing transactions?

I expect that the political will to support high house prices will vanish after the election. Whoever wins they will not need to face another election for a few years. They will also face a massive squeeze on state finances and therefore will probably want to get transaction volume (and the government revenue it generates) back up again.

I am hoping that the next few months will see a massive shift in government policy towards the housing market, whoever wins. From 'stop prices falling at all costs' to 'get tax revenue from the housing market'. This will cause an increase in sales volume and, I'm hoping, a decrease in prices.

What do you guys recon?

I reckon - and the shouting caps is aimed at them, not you - THE STUPIC FU*CKING CU*NTS SHOULD NEVER HAVE ALLOWED HOUSE PRICES TO GET OUT OF CONTROL IN THE FIRST PLACE

It's not as though house price booms and busts have never happened before - we had a boom in the late 80s and the bust went on for most of the 90s.

Everyone knows if there is a house price boom it causes real problems in the economy when the bust happens - housing market transactions collapse and consumer spending drops dramatically.

WHY DID THEY STAND BY AND DO NOTHING WHEN THE MARKET STARTED GOING NUTS?

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btw there is no such thing as the 'shadowy elites' (unless you are talking about Mandleson), you are free to get on with the rest of your life without fear. ;)

Keep the faith :)

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However as I thought about this it occurred to me that they have also shot themselves in the foot with this policy. The volume of transactions has crashed and this must have had a big effect on government revenue from stamp duty ect. Does anybody know how much government revenue came from housing transactions?

It is not just housing transactions low sales volumes also hit the DIY, white goods, carpets and large furniture sales. When moving into a new place one is fairly likely to redecorate and or need new furniture to fill it. More and more property being taken off the market in the form of BTL or people simply staying put surely has a negative effect on sales. Especially as most BTL people I come across ensure they do/spend the absolute minimum on furnishing and maintaining property. (for example my flat got new carpets but they are the nasty cheap office carpet type)

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It is not just housing transactions low sales volumes also hit the DIY, white goods, carpets and large furniture sales. When moving into a new place one is fairly likely to redecorate and or need new furniture to fill it. More and more property being taken off the market in the form of BTL or people simply staying put surely has a negative effect on sales. Especially as most BTL people I come across ensure they do/spend the absolute minimum on furnishing and maintaining property. (for example my flat got new carpets but they are the nasty cheap office carpet type)

Yer I agree - although in some ways renting causes you to buy (and re-buy) more temporary sh!t than you would need if you didn't move house so often.

I would imagine that this will mean that we will reach a point where it is even in the banks interests to see house prices that don't destroy the rest of the economy. At some point surely they are going to want to see volumes increase again.

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