Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Want To Earn A Safe 5% In Fixed Income? Buy Preferred Stocks - 24th April 19
Can Gold Price Rise Without a Rate Cut?  - 24th April 19
Silver’s Next Big Move - 24th April 19
How Can a College Student Invest Wisely? - 24th April 19
Prepare For Unknown Stock Market Price Action As New Highs Are Reached - 23rd April 19
Silver Plays a Small but Vital Role in Every Portfolio - 23rd April 19
Forecasting 2020s : Two Recessions, Higher Taxes, and Japan-Like Flat Markets - 23rd April 19
Gold and Silver Give Traders Another Buying Opportunity - 23rd April 19
Stock Market Pause Should Extend - 21st April 19
Why Gold Has Been the Second Best Asset Class for the Last 20 Years - 21st April 19
Could Taxing the Rich Solve Income Inequality? - 21st April 19
Stock Market Euphoria Stunts Gold - 20th April 19
Is Political Partisanship Killing America? - 20th April 19
Trump - They Were All Lying - 20th April 19
The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade” - 19th April 19
Growing Bird of Paradise Strelitzia Plants, Pruning and Flower Guide Over 4 Years - 19th April 19
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19
Online Grocery Shopping Will Go Mainstream as Soon as This Year - 17th April 19
America Dancing On The Crumbling Precipice - 17th April 19
Watch The Financial Sector For The Next Stock Market Topping Pattern - 17th April 19
How Central Bank Gold Buying is Undermining the US Dollar - 17th April 19
Income-Generating Business - 17th April 19
INSOMNIA 64 Birmingham NEC Car Parking Info - 17th April 19
Trump May Regret His Fed Takeover Attempt - 16th April 19
Downside Risk in Gold & Gold Stocks - 16th April 19
Stock Market Melt-Up or Roll Over?…A Look At Two Scenarios - 16th April 19
Is the Stock Market Making a Head and Shoulders Topping Pattern? - 16th April 19
Will Powell’s Dovish Turn Support Gold? - 15th April 19
If History Is Any Indication, Stocks Should Rally Until the Fall of 2020 - 15th April 19
Stocks Get Closer to Last Year’s Record High - 15th April 19
Oil Price May Be Setup For A Move Back to $50 - 15th April 19
Stock Market Ready For A Pause! - 15th April 19
Shopping for Bargain Souvenirs in Fethiye Tuesday Market - Turkey Holidays 2019 - 15th April 19
From US-Sino Talks to New Trade Wars, Weakening Global Economic Prospects - 14th April 19
Stock Market Indexes Race For The New All-Time High - 14th April 19
Why Gold Price Will “Just Explode… in the Blink of an Eye” - 14th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

UK Housing Market Rescue Plan Will Fail as Government Seeks to Lasso First Time Buyers

Housing-Market / UK Housing Sep 03, 2008 - 01:35 AM GMT

By: Nadeem_Walayat

Housing-Market Best Financial Markets Analysis ArticleWhilst house prices are tumbling at the rate of 2% a month, the labour government finally revealed its feeble attempt to interfere with market forces by suspending the 1% stamp duty taxed on house purchases on properties up to a value of £175,000 for a period of 1 year.


Whilst the stamp duty suspension has been long on the cards as indicated on in the article of 8th August - UK Housing Market Freezes as Chancellor Dithers Over Stamp Duty, the actual action taken is far more muted, as it was originally envisaged to have any impact the stamp duty freeze would need to be applied to the whole housing market right across the board, whereas the announced decision just seems to be targeted towards first time buyers.

Frankly this is the last thing the government should be doing which is to lasso first time buyers into entering into a falling housing market, a 1% saving in stamp duty amidst an a market that is falling at a rate of more than 10% per annum loads first time buyers with a great deal of risk.

The sums just do not not stack up

House value = £175,000

Stamp duty saved at 1% = +£1750

House prices fall by 10% = -£17,500

Mortgage at 6% = -£10,200

Rental at 5% = +£8,500

Estate agent and other costs i.e. insurance -£1200

Will leave first time buyers in 12 months time a net £18,650 worse off than not taking advantage of the governments apparent kindness, that's if first time buyers can find a mortgage.

Other measures announced are aimed more at existing home owners such as providing local Councils with more cash to buy properties from homeowners at risk of repossession and then rent the properties back by turning homeowners into council tenants.

New Homebuy Direct Interest Free loans

A five year interest free loan of up to 30% of the value of new builds. On face value this looks like a pretty good initiative for prospective home buyers that is also aiming to support the construction industry. However new homes tend to be over priced and there the real market value will put home owners into immediate negative equity as soon as they sign on the dotted line. Also the initiative again is forcing prospective home owners to borrow more than they can afford as it is likely after the 5 years are up the interest rate will jump to perhaps base rate plus 1%. Still of the three announcements this is probably the most useful to prospective homeowners, off course the costs will be bourne by all tax payers that on say a £200k property would in effect be subsidising home buyers to the tune of £18,000 over 5 years!

As to where house prices are heading ?

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 forecast, as well as a major update to the UK house price forecast that seeks to map out the UK house price trend for the next 2 years.

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

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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

6 Critical Money Making Rules