Wednesday, February 24, 2010

Worth the read

House prices face double dip

A second credit crunch could send property values into a tailspin

Posted by will @ 10:18 AM (1636 views)
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5 thoughts on “Worth the read

  • i remember the 90`s says:

    A bit of common sense at last ,my brother in law is an independant financial advisor (mortgage salesman to us)thinks that its turning round, even has gone into a partnership with another in new premises ,oh dear!!!!!!!

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  • Previously, I thought the biggest threat to sensible house price adjustment was a massive extension of government sponsored ‘sale and rent back’ schemes and/or propping up the banks with endless money so they don’t have to call in bad loans. I am now wondering whether they can afford either of these.

    The biggest threat now is related to this paper http://www.hm-treasury.gov.uk/d/consult_investment_ukprivaterentedsector.pdf which you should read if you haven’t done so already. It is entitled “Investment in the private rented sector”. The paper argues that the sector is vital to meeting supply although this has the be the stupidest example of feckd-up logic I have ever read. Keeping a house in the hands of large landlords rather than individual owner occupiers does nothing to meet demand since the house remains one house. I think this paper comes from the realisation that the government cannot prop up house prices with public money by endlessly providing money for the banks or letting inflation rip. So this tactic of encouraging large private investors to buy houses with stamp duty and tax concessions is a way of trying to prop them up with private money.

    I have to say, when I first read this paper, the word “evil’ came to mind.

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  • mark wadsworth says:

    TS, these tax breaks are no different to subsidies.

    If they pay a lower rate of tax then everybody else pays a higher rate of tax, thus moving us ever closer to the Home-Owner-Ist death spiral where people’s disposable incomes goes down and down (thus destroying work incentive) and all the tax they pay goes into making housing more and more expensive (thus encouraging idle speculation in existing land and buildings).

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  • “TS, these tax breaks are no different to subsidies”

    Yeah, I know. That’s why this paper is pure evil.

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  • landofconfusion says:

    ” where people’s disposable incomes goes down and down (thus destroying work incentive) and all the tax they pay goes into making housing more and more expensive (thus encouraging idle speculation in existing land and buildings).”

    Labour encougaing idleness and an unproductive workforce? Whatever next. 😉

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