Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Santa Rally to S&P 4600+ - 28th Nov 23
Stocks and Silver Have Something to Say about Gold - 28th Nov 23
Can A Stock Market Crash Be Averted... For Now? - 28th Nov 23
Taiwan 2024 Election: Militarization or Development - 28th Nov 23
The Stock Market Trend and the Policy Behind it - 28th Nov 23
Cameco Uranium Stock Hits All-Time High - 28th Nov 23
TSLA, LRCX, TSMC Stock Earnings and Trend Analysis - 26th Nov 23
A Golden Setup: Gold Price Trend Forecast Report - 26th Nov 23
Gold Stocks Winter Seasonal Rally - 26th Nov 23
Elections in South America and Europe Reveal Backlash against Socialism - 26th Nov 23
LMT, JNJ and ASML Stock Earnings and Trend Analysis - 23rd Nov 23
When AI Hallucinates - Top AI Tech Stocks - 23rd Nov 23
Stock Market Ignoring Hawkish Fed - 23rd Nov 23
Stock Market Trend Trajectory into Year End 2023 - 22nd Nov 23
Copper/Gold Ratio: Still Counter-Cyclical - 22nd Nov 23
Learn to Use the FORCE! - How to Really Get Rich - 21st Nov 23
Quad Witching Cracks Stock Market Nuts - 18th Nov 23
Biden Bizarrely Brags About Lower Budget Deficits as US Federal Debt Skyrockets - 18th Nov 23
Silver Price Between a Rock and a Hard Place - 18th Nov 23
The Most Important Chat GPT Tech Reveal of 2023 - 18th Nov 23
AI Tech Stocks Portfolio - 9th Nov 23
Micron MU Stock Trend Analysis - 9th Nov 23
TSMC Stock Trend Analysis - 9th Nov 23
NVIDIA Stock Trend Analysis - 9th Nov 23
The “new ChatGPT” just launched - 9th Nov 23

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

UK Housing Market Freezes as Chancellor Dithers Over Stamp Duty

Housing-Market / UK Housing Aug 08, 2008 - 02:02 AM GMT

By: Nadeem_Walayat

Housing-Market Best Financial Markets Analysis ArticleThe crashing UK housing market is heading for a further deep freeze following speculation that the Chancellor, Alistair Darling is about to suspend the Stamp Duty tax charged on house purchases in an attempt to stabalise the housing market. The few buyers that are in a position to proceed with home purchases are now delaying completing contracts or pulling out altogether and thereby likely to make the collapse in the level of market transactions even worse, thus contributing to the squeeze on sellers, estate agents and other housing market transaction beneficiaries.


The potential savings of suspension of Stamp duty to house purchasers is huge, as the tax is charged at 1% on houses of between £125,001 and £250,000, rising to 3% for those between £250,001 and £500,000 and a whopping 4% tax on those above £500,000.The government was already heading towards busting its fiscal rule of government debt to keep below 40% of GDP, a loss of the tax generated from stamp duty would hasten this trend as the UK government debt looks set to explode higher to above 60% of GDP by the end of 2009.

The volume of transactions before this latest government intervention was already on par with the 1990's bear market having fallen by more than 50%, additionally supporting data from the British Bankers Association reveals an even sharper contraction in the supply of mortgages as the number of loans approved for house purchases slumps by 66% for June data.

Yesterday, the Bank of England paralysed by fear of igniting stagflation kept interest rates on hold at 5% despite the crash in the UK housing market and the UK economy falling off the edge of the cliff which will become apparent on release of GDP quarter 3 data, that even after the application of a suspect price deflator against will show a sharp deterioration in the UK economy towards economic contraction. The inflation data for July is expected to see inflation continue to nudge higher to above 4% CPI on data to be released next week, which ensures Bank of England inaction for a further few months until release of GDP quarter 3 data.

UK house prices for July as reported by the Halifax came in precisely on target for a fall of 1.7% on the month which now brings average house prices down from the August 07 peak by over £20,000 to the current crash in progress level of being down by 8.9%, against the existing forecast as of August 2007 for prices to fall at by an average rate of 7.5% per annum (minimum) from Aug 07 to Aug 09, as per the recent trend forecast into end 2008 as illustrated below.

Look out for the 2009 UK Interest rates forcast, as well as a major update to the UK house price forecast later this month that seeks to map out the UK house price trend for the next 3 years.

Meanwhile, It is literally amazing to watch this Mr Bean Labour government in virtually every move make matters far worse than before by letting spin get ahead of policy and thus undermining the original objective of the proposed action. This has happened numerous time with the most significant Mr Bean moment being the bottling out of the highly spun October 2007 General Election.

What does the Mr Bean Labour Party have next in store for British Economy?

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 150 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

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

James
08 Aug 08, 12:42
UK house price uptick

I'm curious about the predicted slight upturn in house prices at the end of the year - what is likely to cause this?


matty
08 Aug 08, 15:08
House prices

at the end of the day if it follows your chart we won't even be at 2006 prices! i hope for an even bigger drop


Allan dias
15 Aug 08, 09:45
Cut in interest rates

It must be noted that though the Fed slashed interet rates to 2% the US mortgage rates remain above 6.6%. Therefore, why would the housing scenario in the UK be benefited by the BOE following in the Fed's footsteps?

The problem the UK faces is that you are putting money to unproductive uses (in the long run). 'Investing' in houses does not yield overall (long term) economic benefits to the country like investments in manufacturing does.


sal
19 Aug 08, 12:05
UK Stamp Duty dithering

Any idea when this dithering over stamp duty will be resolved? Sept, Oct..? I wish this government would just all go and jump off a cliff.


sal
19 Aug 08, 12:07
Uk house prices

matty, if you look at the chart, we are already at 2006 prices.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in