Tuesday, February 24, 2009

Pity it’s Toynbee

Owners must be weaned off the house-price drug

House prices are still far too high - they are only back to about 2006 levels, still crazy money. Prices need to fall further to regain any reasonable multiple of people's incomes. But every time prices fall, another round of bad debts hurt the banks' balance sheets and the taxpayer has to pump in more. The nation is still deeply dependent on house prices rising for ever. We still live in a bubble economy, with no way to live except by reinflating it. The state itself has been mainlining on the house-price drug, as addicted as the happy home-owners. Please can we have our bubble back, clamours just about everyone. The 70% who own homes and those who dashed into buy-to-let property yearn for the magical unearned wealth that came from nowhere.

Posted by little professor @ 12:39 AM (1537 views)
Please complete the required fields.



19 thoughts on “Pity it’s Toynbee

  • Bl**dy hell – I actually think I agree with Polly here – well said.

    Reply
    Please complete the required fields.



  • Guardian: Owners must be weaned off the house-price drug.

    Negative ecstasy. lol
    Future advise-Never get high on your own supply!

    Reply
    Please complete the required fields.



  • usually twaddle from Polly.

    Reply
    Please complete the required fields.



  • The implied criticism of Polly Toynbee is as much conformist as her status as the arch PC conformist.She has always taken this line on house price inflation,sometimes with more support for LVT( than the other tax alternatives) . Believe me as someone on the Left, this approach is not welcomed by New Labour which is keen to identify itself as the New Nicer Houseowners Party while the Conservatives bask in the glow of being the Original Homeowners party with a dash of nastiness (never goes amiss).
    Stop being so blinkered and give the woman her due! This article precisely articulates the fix we’re in now. and the line in the sand approach for hpi ,anything beyond this and you get taxed, is the only choice we’ve got left. Our ruling class does n’t have a clue and should shuffle off the stage.

    Reply
    Please complete the required fields.



  • “Almost alone in the world, our tax regime is purpose-built to inflate property. Shares, savings and pensions have taken a hard knock: bricks and mortar will still be a better bet while they are untaxed.”

    That theory does not explain why there has been a global boom if our house price bubble is uniquely a consequence of our tax system.

    Reply
    Please complete the required fields.



  • @1. The US property boom was not as huge as ours. Germany and France have seen no boom at all. I completely agree property shoudl be assessed at 2008 prices and all gains from here should be taxed on sale. Just like any other gain. If our institutions call property an “investment”, then it should be treated as one!

    Reply
    Please complete the required fields.



  • Iblewitlasttime says:

    Well at least the left are starting to see the light and that the market must adjust.

    All this talk of new taxes misses one thing: houses are the ONLY asset class whose gains are tax-free. Simply including peoples houses into Capital Gains Tax would stop them risng so fast, as well as providing a cushion when they fall. So, why not tax houses capital gain?

    Reply
    Please complete the required fields.



  • The rents in Germany and France are much more affordible than in the UK for better housing stock, so no quick buck for the BTLers.

    Reply
    Please complete the required fields.



  • “It would be easy to impose capital gains tax on all future rises: that 18% on any inflation in value, only to be paid on selling it, could stop another bubble.”

    What is she getting at here?

    Would it be any better than the current tax a buyer must pay? The current system only encourages higher prices because people no longer move for the fun of it.

    Reply
    Please complete the required fields.



  • I am convinced this property crash will be used as an excuse to bring in capital gains on private houses. It will be argued that as prices have fallen so much no one will pay it for ages anyway, and that it will damp down any future boom. I can’t really disagree.

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    What DBC says.

    Even though Polly is delightfully and deliciously wrong three-quarters of the time, every now and then she talks good sense.

    Reply
    Please complete the required fields.



  • I currently live in Germany and recently looked at buying a house. The capital gain is taxed if the house is sold within 10yrs. There has been no boom in house prices here and consequently no panik to buy a house incase it is 10% more expensive next year.

    Reply
    Please complete the required fields.



  • It’s only Polly, she will be saying the reverse in a few months (as usual).

    Reply
    Please complete the required fields.



  • Right diagnosis .. wrong remedy.
    Labour/Socialists have a habit of using taxation to curb any everything! Rather than deal with the reasons for the a problem they slap a tax on it to solve it. Smoking, envrionment, traffic congestion, parking, investments … pratically every issue of “too much” is solved with taxation in their eyes.
    There is always a moral hazard with taxation, especially when the issue can be seen as inelastic. The state effectively uses laws to rob the people because it does not use the money gained effectively. Furthermore, it starts to rely on the money gained therefore perpetuating the problem it wishes to curb in the first place!
    The house price bubble was caused by increased credit and a lack of regulation as to who was getting that credit. That was a POLICY!
    Shall I say it again.. it was a POLICY!
    The POLICY was introduced in stages over the last decade, first by Clinton and Brown changing (or freeing up, whichever way you see it) financial regulation (i.e. Brown created the FSA which is a one-stop shop for financial abuse). Then the next stage was using a world event (i.e. 9/11) to lower interest rates for so long as to flood the world with cheap money.
    This process made making millions easy because, there was so much money around no one cared about holding on to it. Therefore money could be invested without fear and suddenly everybody could be rich. Most of this cheap money went into property because property is a lazy way to make money. It does not produce anything tangible yet can make fortunes. Thats why everybody wants to invest in property. It’s requires no real work and we are mostly an incredibly lazy bunch who are always trying to figure out how to do less (that is civilisation).

    It seems to me that the only way out is a steady, slow deflationary spiral that evapourates this excess money out of ALL assets. This would be painful but the most orderly and natural process. The order would be to deflate by neccessity, e.g. products that people dont need or want will deflate in value, that could be artwork, extravagant houses, flash cars.. they should all be allowed to deflate in value until people care enough to buy them.

    Money should be priced at an appropriate level, not 0%, more like 5-8%. It’s painful, but how on earth do you purge this excess money and debt without devaluing assets back to what they realistically are.
    Realistic pricing of money, bigger deposits on mortgages, and better regulation or risk would curb investment in house prices. There is no need for more taxes on housing gains, because houses should not be an investment, they should be places to live in, period.

    Reply
    Please complete the required fields.



  • Polly Toynbee is admired by some for her campaigning against social inequality and injustice, and criticised by others apparently for the same reason. Go figure, as the Americans would say, who incidentally also have favourable tax treatment on houses – mortgage interest relief I believe. The European property boom has been more localised hasn’t it? – Spain, for instance, where it would seem much of it has been driven by foreigners, the English in particular, buying up new builds (some subsequently demolished under the curious property laws there). Mind you, I don’t know that much about Spanish property – life’s too short. Anyway, she’s probably right on the tax issue.

    Reply
    Please complete the required fields.



  • But how on earth will the millions of single parent career women that Dolly Poynless support themselves without remortgaging their overvalued properties.

    It’s the same angle, I agree, that many commentators have been pushing since the 80s property bubble and crash, but as DBC accurately points out the new homeowner/property/milking party (labour) and the old homeowner/social/house/selling party (conservative) will take about as much notice of this woman as they have done of any of the establised political commentators that vaguely talk sense.

    The mainstreem parties in this country are so out of touch and completely unable to actually make any significant changes to the way this country works. Remember, even after the Poll tax riots in 1990, Thatcher just wouldn’t except that her insistance on what was a badly concieved and implemented law, that was clogging up the court system, and just wouldn’t work (I mean, giving benefit recipients extra benefit and expecting them to pay their part – reckon she was already losing her marbles in the 80s!).

    If you want to make significant changes to the way the UK works, I suggest that nothing short of war or revolution will achieve this. Even on this blog you can sense the built up tensions sometimes, that people just want to get into the market at the right time, to make the most money, or maybe just safeguard themselves from the inevitable boom in the next decade or two!

    Reply
    Please complete the required fields.



  • I’m not a reader of Polly Toynbee, but i’m aware of her reputation. I find it slightly depressing that so many readers of this blog, having been exposed to the sh*t from all sides of the political spectrum, the lies, the spin, the misrepresentation of statistics and all the rest, still revent to type, judging the article on the writer rather than content, rejecting a point of view or simply being blind to the obvious because the view is from or associated with ‘the other side’. If there’s anything i’ve learned in the last few years, it’s that contrivbutions should be viewed dispassiontely because most have some sort of value. If this were Polly suggesting that everyone’s mortgage be paid for and free housing for all, then ‘typical Guardian lefty’ might be fair comment, but I can see nothing to disagree with here for those tending to the right.
    If ‘more tax’ is the issue, as many comments suggest, can anyone suggest alternative methods to prevent future booms?

    Reply
    Please complete the required fields.



  • One of the problems I see is that while most say they want equality of opportunity, they really want it for themselves and their children and to pull up the ladder for everyone else. Therefore we have the current system where if you are born now, most of the land has been bought, so tough, you have to pay an arm and a leg for what’s left. Meanwhile everyone else enjoys their unearned income through asset inflation while complaining about the ‘lazy scroungers’ and the state of the nation. Is anyone who questions this state of affairs a ‘lefty?’

    Reply
    Please complete the required fields.



  • Threesixty – a land value tax would not be the same as taxing housing gains and would replace other taxes. It is also an effective way of redistributing wealth that should belong to all by right (the value of our land and resources) rather than redistributing wealth that we did not all contribute to (income taxes). I don’t really see the objection against tax when you suggest regulation – being a natural regulator, tax would be the more ‘free market’ solution, would it not?

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>