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5 "Tells" that the Stock Markets Are About to Reverse

Labour Bribes Voters With Housing Market Stamp Duty Cut and Rent Controls

ElectionOracle / UK General Election Apr 27, 2015 - 07:56 AM GMT

By: Nadeem_Walayat

ElectionOracle

With both Labour and the Conservatives within 10 seats of one another in the opinion polls (273-283) the voter bribes from each are flowing like milk and honey as both parties have temporarily jettisoned economic austerity cuts in favour of housing market pumping election promises that they will in large part not be able to keep without rampant debt printing.


Following hot on the heels of Conservatives recent housing market bribes such as the Help to Buy ISA £3k tax payer subsidy and the extension of the right to buy scheme to 1.3 million Housing Association tenants, amounting to a costly bribe of as much as £103k per voter! Today, the Labour party announced its own housing market giveaways by doing away with stamp duty tax payable on properties of upto £300k for first time buyers that translates into a government housing market cash injection of upto £5000 per home buyer.

The second property market policy targets the private rental sector in the form of rent controls that will have sent shivers down the spine of buy to let investors as Labour clearly attempts to garner votes form the approx 5 million private rental tenants. In response to which political pundits and academic economists have all jumped onto the bandwagon to decry that rent controls just do not work without realising what should be obvious is that it does not matter that rent controls do not work for the primary purpose of the policy announcement is to BRIBE PRIVATE RENTAL VOTERS to VOTE LABOUR.

Though what the mainstream media has appeared to have missed by focusing on the effect on the landlords is that they are assuming that tenants actually want to be locked into 3 year tenancies, which effectively will be priced as a 3 year lease, so what happens if the tenant wants to leave after 1 year? Well under a 3 year lease the tenant would be liable for the remainder of the lease.

The 3 year rent controls would also make it much harder for tenants to move to a property of their choice because there would be LESS available supply as properties would be locked up into 3 year leases. So it will worsen the situation for tenants.

And as my recent article on the UK housing market concluded that the natural consequences of having such a large pool of voters stuck in the private rental sector that by the 2020 general election will exceed 6 million potential voters then it is inevitable that regardless of how unthinkable it may sound today that the political parties will announce extreme housing market policies such as the extension of the right to buy scheme to the PRIVATE RENTAL SECTOR!

15 Apr 2015 - UK House Prices, Immigration, Population Growth and Election Forecast 2015

Thus as I stated earlier that Britain's housing crisis is storing up the potential for a huge deal of social unrest because as much as 1/5th of the UK population may be locked out of the UK housing market in the private rental sector, which implies that under political pressure from such a large number of potential voters that in the lead up to the 2020 General Election political parties may announce what is unthinkable today that is for a catastrophe for buy to let investors as the right to buy scheme is extended once more to the private rental sector that would result in a panic exodus at least at the bottom end of the UK housing market.

Another Labour housing market election bribe is the promise to build 1 million homes during the next parliament i.e. 200k per year, against the current average of 130k, which is set against new annual demand of over 270k per year.

UK house building and population growth

The facts are that the last Labour government's policies are directly responsible for Britains housing crisis as demonstrated by the ratio between the accumulative change in population since 1970 against the accumulative number of new housing builds also since 1970 as an over crowding ratio overlayed with UK house prices that illustrates the worsening trend in the level of over crowding due to inability of new supply to keep pace with new demand that just keeps accumulating each year resulting in the the current extreme.

Britain's Housing Crisis Explained

Britains housing crisis is one of limited new build supply that consistently fails to keep pace with new demand that typically tends to average twice the rate of supply resulting in an worsening housing crisis each year which explains why academic theories of UK house prices being in a bubble that is always imminently destined to burst persistently fails to materialise. Instead the reality is one of house prices relentlessly grinding ever higher with an ever escalating house prices to earnings ratio that on an average stands at over 7X earnings, and far beyond that of virtually every other western nation and in some parts of the UK is greater than 25X earnings as covered in the following video analysis -

Topics:

  • UK population forecast
  • Immigration crisis
  • House building and over-crowding crisis
  • Demographics - Ageing population
  • Political parties and house prices
  • Debt and inflation.
  • UK house prices forecast
  • Opinion polls seats forecasts
  • UK general election forecast

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By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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