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Another Great Article From Investors Chronicle

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Article is free to access as long as you are registered - so I'll paste it here..

Stamp duty move won't save property market

Written by:

Claer Barrett

Shares in housebuilders shot up this week following news that an increasingly desperate government is considering suspending stamp duty in an effort to restart the UK's flagging housing market.

Persimmon, Bovis and Redrow all climbed 17 per cent in a single day, followed by Bellway which rose 15 per cent, and Barratt and

Taylor Wimpey which managed 12 per cent. But, some of the gains were quickly wiped out by news from the Financial Services Authority that repossessions in the first quarter of 2008 increased 40 per cent year-on-year, with lenders taking back 9,152 homes.

Worse, more than 300,000 mortgages were in arrears in the same quarter - an increase of nearly 40,000 - and equivalent to 2.5 per cent of Britain's total mortgage book.

A cynic would argue that the prospect of government intervention in the housing market suggests conditions are set to worsen, but the current crop of statistics already makes for alarming reading. New housing starts are believed to have fallen to levels not witnessed since 1945, making a mockery of the government's housing targets. Land Registry figures show housing transactions have plummeted by 80 per cent in a year, and new mortgage approvals have slumped by 70 per cent.

And there was further embarrassment for the government when Northern Rock reported first-half losses of £585m due to a sharp deterioration in its mortgage lending business. Homes in possession increased by 67 per cent in the period, and loans in arrears more than doubled to 1.18 per cent of its total mortgage book. This rises to 2.14 per cent on risky 'Together' mortgages, which are combined with an unsecured loan.

A housing green paper this autumn is expected to contain a package of measures, including the abolition of stamp duty for homes under £250,000, a new individual savings account (Isa) product for first-time buyers saving for a deposit, and money for housing corporations to buy empty properties for affordable rent.


This is fiddling while Rome burns. The average deposit needed to purchase an average £180,000 house is now £36,000 - twenty times the the potential £1,800 saving on stamp duty. Given the grim statistics, buyers anticipate house prices will fall further, meaning hopes of recovery for the housebuilding sector are built on sand and despite recent bounces in share prices in the sector, investors should remain very wary.

Edited by Hoggums

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  • 395 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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