Thursday, June 25, 2009

“Housing bubbles are bad news – yes, even when prices rise”

An Englishman doesn't have to own his castle

"We ought to have learnt the hard way that home ownership is not a one-way bet. Your home is now worth around a quarter less than in the summer of 2007; as a result, negative equity is fast approaching the heights seen in the early 1990s. The recovery is probably something of a mirage: prices are likely to fall further in the coming months. A sickly housing market has some years left to run. Housing bubbles are bad news – yes, even when prices rise. An overheated property market prompts people to buy homes that are bigger than they really need. In future, the BoE needs the ability to control the loan-to-value levels at which banks lend to customers. Also we must reshape the tax system so that it does not favour home ownership. This may mean a land value tax...."

Posted by drewster @ 02:23 AM (968 views)
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5 thoughts on ““Housing bubbles are bad news – yes, even when prices rise”

  • Its come to something when the Telegraph’s financial expert is proposing we look at land value tax! In a sea of troubles is there not one fixed mark we can look to and find comfort in its unvarying simplicity?

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  • I think we should look further into this land value tax business. I’ll suggest it to Mark Wadsworth.

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  • A new tax, just the thing !
    Lets encourage the government to tinker some more
    maybe they can get all the wheels to fall off at the same time!

    But wait, somebody might relish the prospect of the whole population
    succumbing to poverty so that he /she can feel better.

    Go forthandmultiply, one extra for the country and one extra for the benefits.

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  • Yeah MW seems like a clever enough bloke. He could get some good ideas from the Telegraph.

    (The Telegraph from the year 2015, that is.)

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  • mark wadsworth says:

    Like DBC, I was amazed by this – if I had read it in an Ashley Seager article in the Guardian, fair enough, but following the Daily Hatemail article in which they said where was a shortage of rural housing, I can see little glimpses of daylight…

    @ Delaynomore, while I wholeheartedly support LVT or progressive property tax or making Council Tax more proportionate to true property values, I also think that a) it should be a replacement tax and b) the overall tax burden (and government spending) should come down.

    @ Inbreda, thanks.

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