House Prices to Drop by 20 % ?

COLTRANE · (#1 (**permalink**))

Don't read the text - just scroll on down to the graph and see what happens if the lines continue in a straight line for another year...
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http://tinyurl.com/cey34
http://money.guardian.co.uk/houseprices/story/0,1456,1535384,00.html

Peacemaker · (#2 (**permalink**))

That's nothing, just wait 20 more years when all the newly built houses need repairs.

Mokele Mbembe · (#3 (**permalink**))

OOOOO good news at last!!

WOOOOO

Maybe I can get a mortgageafterall? mwa ha ha ha

COLTRANE · (#4 (**permalink**))

DM
houses aren't going to get cheaper. The government's take on the value of a home will decline slightly because of reform of tax and the procedure in buying a house, as well as a slight straightening of the line between supply and demand in some parts of the UK.
It is more likely that any decline in expense because of reform in tax system will be off-set by some new cost.

Mokele Mbembe · (#5 (**permalink**))

Well the mortgages banks offer me on my salalry at present are so insulting that its not even worth it Coltrane. If house prices drop (the title of your thread) for me it can only be a good thing.

Blackthought · (#6 (**permalink**))

Yup you are right there Coltrane... some of those is actually happening now....

dexxtreme · (#7 (**permalink**))

In the US home prices almost never fall. In many parts of the country, some homes have seen double (and triple) digit percentage growth over the past few years. Very rarely do you see a home's value decline, and if so it is usually because of poor maintenance. In some markets (such as many parts of Florida), people who prepay for new homes under construction can watch the value of their home go up well before the foundation is finished, and can sometimes resell it for 60%-80% more than they paid for it as soon as the house is finished. It makes it nearly impossible for people to enter the market for a home (either new or existing). Unfortunately, I don't see the real estate bubble over here bursting for a while because in my area there are many new subdivisions being created with hundreds (or thousands) of homes each (all well beyond my price range, of course).

Le Moor · (#8 (**permalink**))

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We may get a low for now but next year we shall see another surge because of new changes in law.

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I'd imagine this is going to be pretty significant so if you can invest do so.It appeals big time to corporate money. All planets are aligned what more would one want.

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In London,

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East is where its cooking. What with the olymipics and this, there cannont be many better7 year opportunities around.

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May not be good news for 1st time buyers tho.

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First-time buyers hoping that house prices will subside over the coming year may be disappointed, as a pensions rule change by the Government could lead to a surge of interest in buy-to-let properties which coulddrive property prices even higher.

On April 6 next year, residential property will be allowed to be included in personal pensions for the first time. Many experts predict that the rush of investors looking to take advantage of tax breaks of up to 40 per cent could lead to a recovery in the moribund housing market.

Fionnuala Earley, the chief economist at Nationwide, says that many people will look to take advantage of the Sipps rule change and that this could put pressure on house prices.

"It is a straight forward equation. If there are tax advantages to investing in one type of asset, then people will look at this asset in a more favourable light and relative demand will increase," she said.

Miles Shipside, the commercial director of Rightmove.co.uk, agrees. "I expect this rule change to be positive for the property market but perhaps not for first-time buyers," he said.

But to help address the nation’s pensions crisis, the Government wants more people to take out Sipps. To encourage this, it is expanding the number and type of assets people can put within a Sipp. So, from April 6, higher-rate taxpayers will be able to claim tax relief of 40 per cent and normal-rate taxpayers 23 per cent on the purchase of residential property.

In effect this means that a £100,000 property bought within a Sipp could cost as little as £60,000. Another advantage is that rental income within a Sipp accumulates tax-free. There is also no capital gains tax on any profits when the property is sold.

These generous tax breaks have generated massive interest. Paragon Mortgages, a specialist buy-to-let lender that has commissioned research into the potential demand, believes that the rule change will lead to a 15 per cent or £3 billion surge in the size of the buy-to-let market.

Figures from Sippdeal, a pension broker, appear to back this up. It found that more than 60 per cent of Sipp holders are planning to use their pensions to buy property after April 6 next year.

Mr Shipside believes figures like these will scare many first-time buyers into the market. "More buy-to-let investors could bring about an increased sense of urgency among first-time buyers and that could have a dramatic effect on the market," he said.

"Whether this helps by giving the market a surge or just rescues it from the doldrums only time will tell."

Peter Bolton King, the chairman of the National Association of Estate agents, said he was getting mixed views from his members.

"Some think the rule change won’t make a massive difference, but others are very enthusiastic. My expectation is that it will attract interest and will have an effect but not from day one. It will be a growing thing as more people gain interest."

A spokesman for the Treasury told Times Online that the Government did not expect the change to have "a major impact" on the property market and that the move was not intended to encourage pension investment in any one particular asset class.

"When considering whether to invest in residential property using a Sipp, people should be aware that the restriction on borrowing of 50 per cent of the value of the scheme’s assets, together with the requirement to put all rental income into the pension fund, means it is unlikely to be suitable for many buy-to-let landlords"

The spokesman added that the Government would monitor the impact of the changes, and keep the rules under review.

James Heron, a director at Paragon Mortgages, also offered a cautious tone. "The result of the research we have seen is that the rule change will have a positive impact on both the buy-to-let and pension market but not to the scale that will radically change prices.

"The extent to which the property marketis affected will ultimately depend on the prevailing market conditions."

Despite the conflicting opinions on the eventual impact, the policy change has led to accusations of a lack of joined-up thinking in policy. Critics argue that on the one hand the Government says it is trying to help first-time buyers by increasing the stamp duty threshold, but on the other, it is offering tax breaks that might drive up prices.

Mr Bolton King says there is clearly "a potential conflict" and suggested the government abolish stamp duty for all first-time buyers to compensate.

"It is surely not beyond the realms of possibility to work out who first-time buyers are and exclude them from Stamp Duty. Raising the threshold to £150,000 is nowhere near enough," he said.