people want house prices to fall

cepheus

Electrum wrote: »

Most people believe that falling house prices would be a good thing

According to the FT, a recent international survey by ING found that nearly three-quarters of European consumers believe that “a fall in house prices would benefit society”.


What’s particularly interesting is that it wasn’t just renters who thought so. More than two-thirds of European homeowners – whose net wealth would presumably be threatened by falling prices – agreed too.

Looking at the figures in more detail, nearly 60% of British homeowners and nearly 80% of renters thought a drop in prices would be a good thing.

This is yet another sign that the political mood music is changing.

The social pact under New Labour was fairly simple: the government enjoyed a super-charged tax take as Britain’s oversized financial sector leveraged up the economy.

Those at the lower end of the income scale got tax credits. Those at the top end enjoyed a forgiving tax regime. And those in the middle either gained or could look forward to super-sized gains based on property price inflation. The way to win an election was to make sure that house prices had risen since the last one. That was a surefire sign to most people that the economy was going in the right way.

The credit crunch put a stop to that conveyor belt. It revealed that a lot of the ‘wealth’ was based on fantasy valuations, ones that could evaporate as quickly as they’d appeared in the first place.

Worse than that, it called into question the entire system. With the banking system on the verge of freezing up entirely, the government and central banks felt the need to step in and halt the crash.

http://moneyweek.com/property-investors-beware-people-want-house-prices-to-fall/

Obviously low prices are better. It makes it cheaper to buy and cheaper to move up the ladder, a house remains the same whatever the price. It's a no brainer really unless you're a property speculator or plan on down-shifting. Unfortunately, Estate Agents and political groups have brainwashed the public is believing the marketable value of a property represents real wealth.

cells

A 10% increase in house prices adds £100B to the value of BTLs which is a £28B in tax via CGT. Sure the government doesn't get it right away but people die and the gov will eventually get it. Plus potentially another £28B in inheritance tax.

That's somewhere between £28-56 billion in tax for each 10% HPI that is very significant

Crashy_Time

cells wrote: »

A 10% increase in house prices adds £100B to the value of BTLs which is a £28B in tax via CGT. Sure the government doesn't get it right away but people die and the gov will eventually get it. Plus potentially another £28B in inheritance tax.

That's somewhere between £28-56 billion in tax for each 10% HPI that is very significant

Wow, that means that if the government were to increase house prices by 90% they would make shedloads of money, no wonder they call this country Great!

Crashy_Time

padington wrote: »

A bit of cash right now is quite wise me thinks ( I say housing boom is on but I could well be wrong) but I hope you're not renting, that would be silly.

Own some roof over your head, 250 grand one day might not buy you a garage.

Bird in hand ...

Until you own a roof, you haven't walked out of the casino.[/QUOTE]


:rotfl::rotfl:

mwpt

cells wrote: »

A 10% increase in house prices adds £100B to the value of BTLs which is a £28B in tax via CGT. Sure the government doesn't get it right away but people die and the gov will eventually get it. Plus potentially another £28B in inheritance tax.

That's somewhere between £28-56 billion in tax for each 10% HPI that is very significant

And where does this extra money come from? Why bother waiting for HPI, why not just increase CGT by 10%? Might as well increase VAT by 10% too.

wotsthat

cepheus wrote: »

Obviously low prices are better. It makes it cheaper to buy and cheaper to move up the ladder, a house remains the same whatever the price. It's a no brainer really unless you're a property speculator or plan on down-shifting. Unfortunately, Estate Agents and political groups have brainwashed the public is believing the marketable value of a property represents real wealth.

Low prices don't make it easier to move up the ladder if you've bought in at higher prices so your no brainer isn't a no brainer. In my ideal world prices would be nominally stable (to train speculators into thinking capital gains from property are zero) due to sufficient building and wage increases would reduce prices in real terms until they reach 'low' levels. Obviously the government of the day would F it up by employing a Commissar for house prices and it would all start again.

I don't know if marketable value is the same as the price a house could sell for but the latter is real wealth and affects peoples lives and decisions if you think about it.

wotsthat

mwpt wrote: »

And where does this extra money come from? Why bother waiting for HPI, why not just increase CGT by 10%? Might as well increase VAT by 10% too.

It comes from the next buyer. I don't think Cells is trying to say this is a good or bad thing but demonstrating why a government might think a reasonable % of private rented and a rising market is good thing for government income.

Maybe the BTL tax changes are an ingenious ruse to increase churn in BTL properties because the chancellor is disappointed at the rate at which selfish BTL owners die.

mwpt

wotsthat wrote: »

It comes from the next buyer. I don't think Cells is trying to say this is a good or bad thing but demonstrating why a government might think a reasonable % of private rented and a rising market is good thing for government income.

Maybe the BTL tax changes are an ingenious ruse to increase churn in BTL properties because the chancellor is disappointed at the rate at which selfish BTL owners die.

Of course I get what he's saying, but the money has to come from somewhere. You understand that an increase in household expenditure in one area must mean a contraction in others. Surely the government must understand that too?

sebadee

As someone who finally bought recently, I don't want them to fall of course. I can understand someone saying this who has been riding a wave of 10% increases each year for a while, but as for me I prefer not to have negative equity thanks.

I would much rather they stablish and remain static while wages catch up. That would be fine with me. I don't mind if my house does not increase, I just want to get on with paying off the mortgage and keeping my head above water.

The-Joker

mwpt wrote: »

They have. Markets go up and down. Except property though, it seems. Can't lose in bricks and mortar. Safe as houses guv.

Its only the perm prob bulls who still try to claim that property will never go down.

Everybody else knows that what goes up WILL come down at some point.