Housing Market

  oresome 20:30 04 Sep 2008

Does anyone think the measures taken by the Government to stimulate the housing market will have a significant impact?

{The raising of the stamp duty threshold to 175K and some assistance to first time purchasers of new homes by way of delayed interest payments from what I understand.}

  bjh 22:07 04 Sep 2008

On an average value house, the saving made on zero stamp duty is slightly less than the drop in price of the same house over one month.

No, not a blind bit of difference. My house is on the market, I don't believe it'll sell this year. No chance.

It will help new-build companies, who can target prices accordingly. Some were large Labour Party donors up to a few years back.

It will hugely damage sales in the £175,000 to £250,000 price range (where people will try to get price down for zero rating), and also in the just-over-£250,000 price, where the higher rate will cut in. 0% at 175,000 and 3% at £250,000.

Stupid. Stupid. Stupid.

  lotvic 01:12 05 Sep 2008

I'll let you know about the impact when/if I ever get a buyer for my house - it's been on the market for past 12 months

  Cymro. 12:19 05 Sep 2008

It is just a cosmetic thing, a drop in the ocean no more.

  oresome 12:35 05 Sep 2008

I'll take that as a NO then!

  dms_05 12:59 05 Sep 2008

Seems odd to me. I thought the problem was the lack of funds available for mortgage lending and the need to have an extremely strong credit rating (and deposit) to obtain a mortgage.

Additionally I would have though the 10% reduction in selling prices made more difference than 1% Stamp Duty removal.

In my part of the world good quality homes at sensible prices are still selling. However there are examples of houses that didn't sell 2 years ago still been on offer at 2006/7 prices.

  Les28 13:57 05 Sep 2008

House prices as a ratio to average incomes are now at 6 or more to 1, the traditional benchmark price to average wage ratio is nearer 3 or more to 1, ie present house prices reflect an overbought market, almost an auction rather than a market, selling to the highest bidder in the latest "feeding frenzy" seems to be the fashion.

In recent times house prices have deviated from the 3 to the 6 ratio on a couple of occasions, mid 70's and early 90's and a correction resulted each time back to the more traditional benchmark. In any market to assume an exponential upward growth is certainly a triumph of optomism over experience.

To expect the government to interfere in a cyclic market fluctuation and correction is asking a bit much, why should they? We live in a free enterprise society and let markets regulate themselves, supply and demand etc.

I imagine there will be a shortage of funds available for buying overpriced houses, I wouldn't want to lend money to buy something which I knew wasn't worth the asking price in the first place. I feel sorry for people classed as sub prime high risk loans, as one would wonder are they high risk because their income is low or is their income just seen as low in comparison with the overpriced house values and a return to more normal house prices would see their income as adequate.

There is still plenty of sideways movement in the so called housing market, existing home owners for a variety of reasons, location, down sizing etc, "swopping" their over priced homes with anothers over priced home, but the incomers to maintain a rising market, the first time buyers just aren't there, priced out because their income isn't sufficient because the ratio has gone wrong between house prices and average income, so the market correction has well and truly started.

Any cosmetic tinkering seems to me a little like reducing the price of windscreen wipers for a top priced sports car, it's the price of the car that needs reducing, in this case, houses.

  oresome 15:39 05 Sep 2008

My first house in the 1970s cost around £3,500. Salary at the time was in the region of £1000 pa.

Rule of thumb for affordability was that weekly wage equated to monthly mortgage payment. I think the mortgage was £22 per month.

Many wifes didn't work, or if they did, not full time back then. Almost a necessity now to purchase a house.

  Les28 16:40 05 Sep 2008

A couple of interesting and connected points raised here, the multiplier increase and the second partner working full time.
How is a price established for a house? There is no manufacturers recommended selling price on houses like on many other goods, go back to when it used to be just the man of the house working and the wife staying at home, house prices were pitched at the one income buyer and amazingly still got sold, now the same houses are pitched at two incomes. Does the fact that people have more income mean that house prices can be pitched at a two income buyer, if so why? So the housing industry can act as the vacuum cleaner for peoples extra income, what a good idea on their part.

From the original purchase of the building plot, in the case of new houses, to the resale of a 1920's that cost £200 to build, the two wage factor is assumed. You've got it and we're going to have it off you attitude, nothing whatsover to do with the actual cost but what you or someone else can afford to pay.

Ironic isn't it that our supermarkets are doing their best to cut their prices, on behalf of their customers of course!! , usually at a cost to the lower paid workers in our society who produce so much of the supermarkets wares, the sub prime high risk group! I wonder why they bother while the housing industries vacuum cleaner is out there waiting to suck up their surplus free cash. They've got more money, thank you supermarkets, now lets put the house prices up again.

So now the time has come, the upper limit of what people can or will pay has been reached and the market auction has to correct its prices.

  Forum Editor 17:44 05 Sep 2008

that the measure will have any appreciable effect.

  oresome 17:46 05 Sep 2008

As is being demonstrated now, the ready supply of money has a great influence on the price of housing.

With housing prices on a seemingly ever upward path and loans available on introductory rates, no wonder purchasers jumped in before they were totally outpriced.

The percentage of income lent seemed to be stretched to unrealistic levels, which coupled with 110% property valuations eventually spells disaster when there is a economic downturn.

Did all this stem from the privatisation of many building societies?

They were the prime mortgage providers, mutual in ownership and staid in business practise. Many then demutualised and chasing profit meant a relaxation of the lending rules and a gearing of the business to lend money they didn't actually have themselves.

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