Should HPI be taxed as Capital Gains

CLAPTON

Perelandra wrote: »

If CGT were brought in for sales of primary residences, I'd probably never sell a house again- just rent it out and either buy or rent a home in the area I needed to move to.

ah...... unintended consequences

Perelandra

CLAPTON wrote: »

ah...... unintended consequences

Yup, 'xactly.

MFW_ASAP

the_flying_pig wrote: »

imagine that all residential house sales attracted CGT of 18%... according to Fergus Wilson, 'house prices double every seven years'... so in just 7 years you're talking about half a house being taxable, i.e. losing 9% of your house in the first seven years only, even for a cheap house.

But that's the point (and it has been mentioned a couple of times), would houses carry on increasing 100% every 7 years if there was an effective measure to put the breaks on it?

I guess it all depends on whether you want homes to be investments or just places to live. If CGI could stop HPI in its tracks, with a metric to ensure that houses just go up in line with Inflation (again, suggested earlier in the thread), then houses would not double and we all wouldn't be beggaring ourselves to get larger and larger mortgages to buy them.

To be honest, I've never really understood the HPI cheerleaders, they seem to be turkeys voting for xmas. Fine if they have reached the apex and want to downsize with a nice amount of money, but to actually want more expensive houses as they are moving up the ladder? Bonkers.

Generali

MFW_ASAP wrote: »

But that's the point (and it has been mentioned a couple of times), would houses carry on increasing 100% every 7 years if there was an effective measure to put the breaks on it?

I guess it all depends on whether you want homes to be investments or just places to live. If CGI could stop HPI in its tracks, with a metric to ensure that houses just go up in line with Inflation (again, suggested earlier in the thread), then houses would not double and we all wouldn't be beggaring ourselves to get larger and larger mortgages to buy them.

To be honest, I've never really understood the HPI cheerleaders, they seem to be turkeys voting for xmas. Fine if they have reached the apex and want to downsize with a nice amount of money, but to actually want more expensive houses as they are moving up the ladder? Bonkers.

Setting prices centrally has a history of ending with the Gulag. I'd rather pay more for a house than be banged up in Siberia or worse.

Generali

MFW_ASAP wrote: »

Yes, amazingly enough they held onto their land during the downturn and only started to build when house prices started to go up.

Perhaps they had already built all the houses they could sell.

Contrary to economic theory, most companies on an operational level look to maximise sales rather than maximising profits.

MFW_ASAP

Generali wrote: »

Setting prices centrally has a history of ending with the Gulag. I'd rather pay more for a house than be banged up in Siberia or worse.

Yes, because those are the only two alternatives. Keep current property taxes or end up in a gulag.

I guess it makes a nice change from Godwin's law, it's the Reds instead of the Nazis.

MFW_ASAP

Generali wrote: »

Perhaps they had already built all the houses they could sell.

Contrary to economic theory, most companies on an operational level look to maximise sales rather than maximising profits.

I doubt that many companies want to maximise sales at the expense of profit. Well, not those that are still in business anyway.

CLAPTON

Generali wrote: »

Perhaps they had already built all the houses they could sell.

Contrary to economic theory, most companies on an operational level look to maximise sales rather than maximising profits.

As I see it, any sensible company would choose to maximise profit rather than sales if at all possible.

However, to do so, they would need to predict and control the elasticity of supply and demand i.e. the relationship between the price of properties and their selling price.

If there were a very effective organised cartel (one thinks of OPEC) at least the supply side can be (semi) controlled but even then, demand isn't controlled so in practice accurate prediction the supply/demand curve is impossible.

In the context of the UK housing market, there are hundreds of house builders, few barriers to entry any effective cartel to control the number of properties built is impossible.

Add that demand is largely controlled by mortgage available and people ability to save sufficient deposit the maximise profit route is impossible.

In the real world, builders build what they guess they can sell at some sort of profit, subject to their cash flow constraints.

Generali

MFW_ASAP wrote: »

I doubt that many companies want to maximise sales at the expense of profit. Well, not those that are still in business anyway.

I guess you've never worked in business or at least not in any area that has any clear view of how the actions of staff impact the bottom line.

Very few sales staff have a profit target rather than a sales target.

The answer to very few problems is more Government. I don't see why the housing market would be any different.

Generali

MFW_ASAP wrote: »

Yes, because those are the only two alternatives. Keep current property taxes or end up in a gulag.

Try reading The Road to Serfdom. A very interesting book on why all socialism leads, ultimately, to the Gulag and the Concentration camp written by a man who saw the lead up to WW2 at close quarters.

All attempts to set prices by diktat fail eventually. There are 2 possible reactions to that failure: accept it and give up (e.g. the UK's disastrous attempts to fix exchange rates since the end of WW1) or keep imposing more and more oppressive measures to keep prices where you want them to be.

Why not just build more houses? Let people build and they will. The market will provide to those with money. The only argument than is what to do about those who are unwilling or unable to earn money.