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Rishi Sunak’s stamp duty cut is not about helping first-time buyers, but shoring up the whole UK economy


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Indeed. This is why it's hard to bet on a house price crash.

There are lots of reasons why the market should crash, but there are also lots of reasons why the government will do everything it can to avoid it. Mortgage holidays, tax cuts, more helicopter money (a la HTB), the sky is the limit.

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9 minutes ago, GodlessEndeavor said:

Indeed. This is why it's hard to bet on a house price crash.

There are lots of reasons why the market should crash, but there are also lots of reasons why the government will do everything it can to avoid it. Mortgage holidays, tax cuts, more helicopter money (a la HTB), the sky is the limit.

And yet they happen.

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7 minutes ago, Warlord said:

They always do eventually ... they kick the can down the road but eventually run out of road . 

I keep wishing this would happen - who knows, maybe this time.

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1 minute ago, dougless said:

I keep wishing this would happen - who knows, maybe this time.

Keep faith. It happens all the time in history if you study bubbles ... all over the world. We are not immune or some how different or detached from the laws of economics.

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2 hours ago, dougless said:

This won't be news to us here but it’s good to see this view being expressed elsewhere:

 

https://theconversation.com/rishi-sunaks-stamp-duty-cut-is-not-about-helping-first-time-buyers-but-shoring-up-the-whole-uk-economy-142443

Good link, thanks for posting. Saves me lots of the exasperation of trying to explain to cross-armed boomer family how f**cked up the whole situation is. Now I can just send this. Perhaps they’ll believe it as it’s written by a journalist. 

It’s been said by many; but if a global pandemic and Brexit doesn’t make prices drop, nothing will. 

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4 hours ago, ForGreatLager... said:

Good link, thanks for posting. Saves me lots of the exasperation of trying to explain to cross-armed boomer family how f**cked up the whole situation is. Now I can just send this. Perhaps they’ll believe it as it’s written by a journalist. 

It’s been said by many; but if a global pandemic and Brexit doesn’t make prices drop, nothing will. 

We have had the quarterly highest GDP drop since the Great Frost of 1709 - which was the coldest recorded winter for 500 years.

That happened 67 years before the US Declaration of Independence - so this isn’t just one in a generation it’s a once in 300 years event!

As you say if that doesn’t deliver a house price crash - eventually - you might as well just close this website down!!

https://www.reuters.com/article/us-health-coronavirus-britain-economy/never-had-it-so-bad-plague-weather-and-war-did-worse-to-the-uk-economy-idUSKBN22J2XQ

 

 

Edited by MARTINX9
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5 hours ago, Bruce Banner said:

And yet they happen.

The certainly have happened, but have they actually happened "properly" since governments (the world over) decided that protecting property prices was their fundamental and overriding economic concern?

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1 hour ago, MARTINX9 said:

We have had the quarterly lowest GDP drop since the Great Frost of 1709 - which was the coldest recorded winter for 500 years.

https://www.reuters.com/article/us-health-coronavirus-britain-economy/never-had-it-so-bad-plague-weather-and-war-did-worse-to-the-uk-economy-idUSKBN22J2XQ

 

 

You know things are serious when the last comparable record of anything quite as bad was written with a quill! 

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1 hour ago, MARTINX9 said:

We have had the quarterly lowest GDP drop since the Great Frost of 1709 - which was the coldest recorded winter for 500 years.

That happened 67 years before the US Declaration of Independence - so this isn’t just one in a generation it’s a once in 300 years event!

As you say if that doesn’t deliver a house price crash - eventually - you might as well just close this website down!!

https://www.reuters.com/article/us-health-coronavirus-britain-economy/never-had-it-so-bad-plague-weather-and-war-did-worse-to-the-uk-economy-idUSKBN22J2XQ

 

 

Some where in a parallel universe there is a house price crash happening right now. 

 

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8 hours ago, dougless said:

This won't be news to us here but it’s good to see this view being expressed elsewhere:

 

https://theconversation.com/rishi-sunaks-stamp-duty-cut-is-not-about-helping-first-time-buyers-but-shoring-up-the-whole-uk-economy-142443

So you admit that they have meddled in the market for years and continue to do so yet you still stand at the side?

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Since there will only be a proportion of the population that are able to move or buy.....be interesting to know what that percentage is, way less than 50% would think......it is all about encouraging movement of money, turnover, velocity to those that can......special offer, do not miss out, up to 5% off.;)

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9 hours ago, ForGreatLager... said:

You know things are serious when the last comparable record of anything quite as bad was written with a quill! 

Brilliant, I think that should be written on a wall.

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I personally think that the stamp duty holiday is a desperate attempt to bring forward demand and prevent builders mothballing sites. 

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Posted (edited)
3 minutes ago, Timm said:

I personally think that the stamp duty holiday is a desperate attempt to bring forward demand and prevent builders mothballing sites. 

Good point as if it keeps the housing market afloat it will do that as well.  And in turn that will keep some of the Tory party donors happy - a win, win for the Tories.

.

Edited by dougless
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If the government wanted to really shore up the economy they could use the revenue from stamp duty to improve infrastructure, increase competitiveness of export industry, healthcare, education, subsidize housebuilding etc. Instead they chose to forgo important source of revenue for the benefit of speculators. How much economy will gain from buying or selling of old houses? I would think it is close to zero.

The only reason they did this stamp duty 'holiday' is because they want to prop up asset prices. The government officials are all deep in the housing market. They will keep bubble inflated for their personal benefit regardless of costs to the economy or society.

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1 hour ago, AAA said:

If the government wanted to really shore up the economy they could use the revenue from stamp duty to improve infrastructure, increase competitiveness of export industry, healthcare, education, subsidize housebuilding etc. Instead they chose to forgo important source of revenue for the benefit of speculators. How much economy will gain from buying or selling of old houses? I would think it is close to zero.

The only reason they did this stamp duty 'holiday' is because they want to prop up asset prices. The government officials are all deep in the housing market. They will keep bubble inflated for their personal benefit regardless of costs to the economy or society.

Politicians exist to fill their own boots, help out their friends and line up lucrative jobs after they’ve left politics. General elections have become a choice of which suited thugs you’d like to come and burgle you. All the while lobbying and donations exist, we will never have politicians who work for the people. A radical change in politics is needed. Perhaps it will come as more and more generations are priced out of life. 

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16 hours ago, Bruce Banner said:

And yet they happen.

They do but long term house prices can be kept out of sync for many decades. Certainly there have been times when house prices have been well above long term trend for long times. In the hpi cycle of that started in the 1720's it took 60 years to revert to real norm so we could see house prices remain statically high till 2055 if that is repeated.

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2 minutes ago, ForGreatLager... said:

Politicians exist to fill their own boots, help out their friends and line up lucrative jobs after they’ve left politics. General elections have become a choice of which suited thugs you’d like to come and burgle you. All the while lobbying and donations exist, we will never have politicians who work for the people. A radical change in politics is needed. Perhaps it will come as more and more generations are priced out of life. 

Excellent analysis.

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2 minutes ago, AAA said:

If the government wanted to really shore up the economy they could use the revenue from stamp duty to improve infrastructure, increase competitiveness of export industry, healthcare, education, subsidize housebuilding etc. Instead they chose to forgo important source of revenue for the benefit of speculators. How much economy will gain from buying or selling of old houses? I would think it is close to zero.

The only reason they did this stamp duty 'holiday' is because they want to prop up asset prices. The government officials are all deep in the housing market. They will keep bubble inflated for their personal benefit regardless of costs to the economy or society.

They need to prop up prices so that the house builders can sell their existing stock and move on to "build build build" more.

Falling house prices does not just risk deflation, it potentially puts hundreds of thousands out of work if the sites are not open.

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Ever-increasing property prices are one of the biggest reasons why housebuilders don't build enough houses. It is much more easier and profitable to hoard their new built housing stock and drip feed it into rising market. Lack of supply also allows them to sell low quality products for ridiculous prices.

If government really wants to kick start housebuilding they need to 1) Introduce a new tax on land with planning permission and empty new build houses; 2) Abolish excess planning restrictions; 3) Increase competition in housebuilding industry; 4) Invest in new infrastucture.

Stamp duty 'holiday' will only help rich property speculators at huge cost to taxpayers but will probably have negligible effect on general economy.

 

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50 minutes ago, Timm said:

They need to prop up prices so that the house builders can sell their existing stock and move on to "build build build" more.

Falling house prices does not just risk deflation, it potentially puts hundreds of thousands out of work if the sites are not open.

See above

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  • 416 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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