Likely effect of the stamp duty elimination on house prices

System

Argh, why are people thinking of the stanp duty holiday as nothing but a 1% saving? Aside form Hamish's point it also removes one of the initial barriers, that big chunk of cash thats not needed up front.

Think people, think!

nollag2006

Joeskeppi wrote: »

Think people, think!

When you are dearly madly scraping for reasons why house prices “must” fall, when an increasing wave of rising house prices, improving economic data, and improved availability of mortgage finance are all set against you, then rational thought goes out the window.

Shame that so many of these bears will still be holding out a vain hope for a crash in 12 months time.

nembot

Good point actually by Hamish.

Cat695

HAMISH_MCTAVISH wrote: »

That extra 2K saved on a 200K house equates to an extra 2K on the deposit, which then gets you between an extra 6K and 18K of borrowing.;)

The stamp duty holiday just increased buying power by as much as £20,000.

Or people selling a house now put their price up because they don't have to worry about stamp duty...so a FTB actually losers

You and I both know what will really happen Hamish and please don't say it won't because people are greedy/EA are greedy and will pick up on this straight away.

And you will only need propertybee to see it happening!

princeofpounds

Or people selling a house now put their price up because they don't have to worry about stamp duty...so a FTB actually losers

Taxes typically incur a deadweight cost to the economy which is bourne both by buyer and seller, the distribution of which depends on the characteristics of the specific market.

So in this instance both buyers and sellers will benefit. A little.

Frankly this is pretty meaningless in the grand scheme of things, but lower taxation generally is an incrementally good thing.

I never understood the logic of stamp duty as a tax, given that housing transactions neither incur externalities that need to be dealt with through a publicly-funded method nor are undesirable behaviours.

Wish we would tax bad things rather than good things like employment!

Linton

How about....

First time buyers will be encouraged into the market sooner than otherwise, and will have a little more money to spend. With the supply constant, cheaper house prices will rise so as to take most but not all of the new spending power. So FTBs will be slightly better off, sellers will be more better off and the government and non FTBs worse off .

boomerangs

nollag2006 wrote: »

Sometimes a picture says a thousand words...

Just in case anyone might take anything you post seriously, you lost all remaining credibility today when you started this nonsense thread.
http://forums.moneysavingexpert.com/showthread.html?t=2374415

:rotfl:

Graham_Devon

HAMISH_MCTAVISH wrote: »

Since forever..... A larger deposit increases the size of loan eligibility, as for most people saving the deposit is a bigger hurdle than the LTI ratio.

Example:
Previously: Savings of £20K for deposit + £2K for stamp duty......
90% LTV, 10% deposit, = £180K mortgage, £20K deposit, and total purchasing power of £200K

Now: Savings of £20K for deposit, + £2K no longer needed for stamp duty, so deposit of £22K. 90% LTV, 10% deposit, = £198K mortgage, £22K deposit, and total purchasing power of £220K.

You can now borrow another 18K, based on an extra 2K deposit at 90% LTV.

Oh right, so you werent talking affordability. You were simply talking about getting into more debt.

I spose I see where you are coming from, even if it is a little on the far fetched side.

Thrugelmir

HAMISH_MCTAVISH wrote: »

Since forever..... A larger deposit increases the size of loan eligibility, as for most people saving the deposit is a bigger hurdle than the LTI ratio.

Example:
Previously: Savings of £20K for deposit + £2K for stamp duty......
90% LTV, 10% deposit, = £180K mortgage, £20K deposit, and total purchasing power of £200K

Now: Savings of £20K for deposit, + £2K no longer needed for stamp duty, so deposit of £22K. 90% LTV, 10% deposit, = £198K mortgage, £22K deposit, and total purchasing power of £220K.

You can now borrow another 18K, based on an extra 2K deposit at 90% LTV.

A slight flaw in your calculations.........

Mortgages are calculated on borrowers incomes not their deposit as a % of the property purchase price.

I begin to understand now why you ramp up house prices. As finance obviously isn't one of your stronger subjects. :beer:

DaddyBear

HAMISH_MCTAVISH wrote: »

Since forever..... A larger deposit increases the size of loan eligibility, as for most people saving the deposit is a bigger hurdle than the LTI ratio.

Example:
Previously: Savings of £20K for deposit + £2K for stamp duty......
90% LTV, 10% deposit, = £180K mortgage, £20K deposit, and total purchasing power of £200K

Now: Savings of £20K for deposit, + £2K no longer needed for stamp duty, so deposit of £22K. 90% LTV, 10% deposit, = £198K mortgage, £22K deposit, and total purchasing power of £220K.

You can now borrow another 18K, based on an extra 2K deposit at 90% LTV.

You're right Hamish, assuming of course that all the FTBers earn the £50k to £60k in order to afford the £200k mortgage.