How far will house prices fall [volume 4]

[edh]

The Definitely Not A Candidate For The Tory Leadership Jacob Rees-Mogg said:

The recent cuts in corporation tax, one of George Osborne’s most successful policies, has more than doubled the tax received by the government.

This has helped businesses afford to invest and employ people leading to a stronger economy and allowing the Government more easily to finance its expenditure. This example ought to be applied to income tax and, as a matter of urgency, to stamp duty.

Which just shows that he's either stupid or disingenuous (I don't think it's the former)

Corporation tax receipts crashed in 2008/9 - so comparing against that low base is helpful, also comparing in cash terms rather than say % of national income so ignoring growth.

See below for much more balanced analysis of all the factors influencing corporate profits & CT

https://www.ft.com/content/ca3e5bd2-2a7e-11e7-9ec8...

https://www.ifs.org.uk/publications/9207

[turbobloke]

edh said:

Which just shows that he (JRM) is either stupid or disingenuous (I don't think it's the former)

Corporation tax receipts crashed in 2008/9 - so comparing against that low base is helpful, also comparing in cash terms rather than say % of national income so ignoring growth.

See below for much more balanced analysis of all the factors influencing corporate profits & CT

https://www.ft.com/content/ca3e5bd2-2a7e-11e7-9ec8...

And yet when you scan the FT article it puts forward contributory factors (operating over time) for the increase in CorpTax receipts as
- UK economy has grown and profits with it (circular argument? low corptax helps growth)
- banks have paid more corptax since 2011/12 (that's definitely a circular argument - there's more corptax because payers have paid more corptax)
- business investment fell 2%...in 2016!... ONE year ago
- crackdown on avoidance (not likely a major factor, avoidance is lawful)
- Google tax (hardly worth the pixels)
- GB attractiveness to global companies (back to circular arguments, low CorpTax makes GB attractive to businesses)

Basically the FT ought to put its hands up and ackowledge that a lower CorpTax rate has indeed been responsible for a bigger CorpTax take. All in all there was nothing bad about JRM's mention.

Naturally the pink 'un had to work in a negative brexit mention at the end, same old.

Edited by turbobloke on Monday 14th August 12:36

[turbobloke]

More than a million pensioners would 'likely downsize' if stamp duty were lifted, says YouGov survey.

[WCZ]

rxe said:

as others have said, the fact that the house is worth 2.1 million makes no difference to me. I still need a house, and if I wanted to move somewhere bigger .... it would cost a lot more.

nothings changed other than you can retire, rent it out and live off the income for the rest of your life whilst living somewhere in a less insanely overpriced location or sell it and do the same/reinvest elsewhere

Edited by WCZ on Monday 14th August 13:00

[WCZ]

princeperch said:

I keep an eye on all my old haunts, just out of interest- nothing more. I noted today that flats in one bit of East London I used to live in (dalton) have taken a bit of a pasting in recent months.

I used to live in this block a few years ago. They were worth about 250-275 6-7 years ago, and bounced up to 450ish a year or so ago. Now they are come back on the market at well under 400k.

http://www.rightmove.co.uk/property-for-sale/prope...

Edited by princeperch on Sunday 13th August 10:13

it'd be excruciating to pay £400k for something so generic and bland !

[edh]

turbobloke said:

More than a million pensioners would 'likely downsize' if stamp duty were lifted, says YouGov survey.

LOL I'm convinced

Where to? There's a massive shortage of suitable housing.

Stamp duty only a big issue in SE, not in rest of country. Why would a couple of thousand pounds put you off making such a significant move?

Anyway, I'm not arguing in favour of SDLT, it's a daft tax. Reform of property taxes is a good idea, simple removal of SDLT isn't.

[p1stonhead]

WCZ said:

princeperch said:

I keep an eye on all my old haunts, just out of interest- nothing more. I noted today that flats in one bit of East London I used to live in (dalton) have taken a bit of a pasting in recent months.

I used to live in this block a few years ago. They were worth about 250-275 6-7 years ago, and bounced up to 450ish a year or so ago. Now they are come back on the market at well under 400k.

http://www.rightmove.co.uk/property-for-sale/prope...

Edited by princeperch on Sunday 13th August 10:13

it'd be excruciating to pay £400k for something so generic and bland !

Yeah that is fking horrendous.

[turbobloke]

Tonker - that sounds about right.

[rxe]

WCZ said:

nothings changed other than you can retire, rent it out and live off the income for the rest of your life whilst living somewhere in a less insanely overpriced location or sell it and do the same/reinvest elsewhere

Edited by WCZ on Monday 14th August 13:00

I could, but under LVT, I'd have to.

I'm also not entirely sure that LVT can control house price increases....

[Bullett]

p1stonhead said:

Yeah that is fking horrendous.

I'm impressed the EA managed 12 photos for that.

[p1stonhead]

Bullett said:

p1stonhead said:

Yeah that is fking horrendous.

I'm impressed the EA managed 12 photos for that.

This looks like the walkways in a prison!

[Justayellowbadge]

p1stonhead said:

Yeah that is fking horrendous.

Wouldn't particularly want to live in it, but not a bad renter I'd have thought. More so at 250 than 400, admittedly..

[edh]

turbobloke said:

And yet when you scan the FT article it puts forward contributory factors (operating over time) for the increase in CorpTax receipts as
- UK economy has grown and profits with it (circular argument? low corptax helps growth)
- banks have paid more corptax since 2011/12 (that's definitely a circular argument - there's more corptax because payers have paid more corptax)
- business investment fell 2%...in 2016!... ONE year ago
- crackdown on avoidance (not likely a major factor, avoidance is lawful)
- Google tax (hardly worth the pixels)
- GB attractiveness to global companies (back to circular arguments, low CorpTax makes GB attractive to businesses)

Basically the FT ought to put its hands up and ackowledge that a lower CorpTax rate has indeed been responsible for a bigger CorpTax take. All in all there was nothing bad about JRM's mention.

Naturally the pink 'un had to work in a negative brexit mention at the end, same old.

Edited by turbobloke on Monday 14th August 12:36

same old nonsense...

Corporate profitability has increased therefore more corp tax - not surprising when compared with 2008/9, (remember there was a global financial crisis & recession) particularly wrt banking profits.

Optimum tax policy (maximising receipts) isn't necessarily to keep cutting surely? We may well have CT rates that are below those that maximise tax income.

One related point - I had a chat with a tax lawyer last year who says their tax advice to businesses includes the consideration of what will be perceived by external parties as fair and ethical tax positions, not just "legal" as there is much more public interest these days, & the damage to a brand getting it wrong may outweigh any tax savings.

a bit OT, sorry..

[Pork]

p1stonhead said:

How long until a certain level of rates become normal? It was 0.5% for 8 years and then halved down to 0.25% when I thought it was going to at least go to 1% to be honest. The BOE recently said they wouldn't be rising any time soon. Lots of people have never seen higher rates and so aren't concerned about levels of mortgage they are taking on. It does have a hint of a possible house of cards which could come crashing down. A guy who works with a mate of mine recently took out a £550k mortgage on a £700k house....slightly scary!

Doesn't look like interest rates is the catalyst for the current softening in the market. Let's see how Brexit and the like turns out and what it does to the markets.

Slightly scary, but increasingly a fact of life and it will only get worse as houses continue to increase in price.

Amazing really that they managed to save £150k.

[okgo]

Pork said:

Slightly scary, but increasingly a fact of life and it will only get worse as houses continue to increase in price.

Amazing really that they managed to save £150k.

Equity.

It is a big mortgage, but as with everything, if you can afford it if/when payments go up, what is the issue?

[p1stonhead]

Pork said:

p1stonhead said:

How long until a certain level of rates become normal? It was 0.5% for 8 years and then halved down to 0.25% when I thought it was going to at least go to 1% to be honest. The BOE recently said they wouldn't be rising any time soon. Lots of people have never seen higher rates and so aren't concerned about levels of mortgage they are taking on. It does have a hint of a possible house of cards which could come crashing down. A guy who works with a mate of mine recently took out a £550k mortgage on a £700k house....slightly scary!

Doesn't look like interest rates is the catalyst for the current softening in the market. Let's see how Brexit and the like turns out and what it does to the markets.

Slightly scary, but increasingly a fact of life and it will only get worse as houses continue to increase in price.

Amazing really that they managed to save £150k.

To be fair their income is close to £150k so £550k mortgage isn't that ridiculous overall but generally that number seems insane. Its not even at maximum lending which would be near £750k!

[Pork]

p1stonhead said:

To be fair their income is close to £150k so £550k mortgage isn't that ridiculous overall but generally that number seems insane. Its not even at maximum lending which would be near £750k!

Which, at any point in the past 15-20 years, they'd have done very well tomhave taken.

Are lessons being learned or is your mate just a bit sharper than average?

[Pork]

okgo said:

Equity.

It is a big mortgage, but as with everything, if you can afford it if/when payments go up, what is the issue?

Absolutely, if it's primarily a home not primarily an investment. I absolutely agree. However, if it's on the threashold of affordability, it's risky as IRs have greater scope for going up than down.....unless the news of negative IRs coming becomes a reality.

[p1stonhead]

Pork said:

p1stonhead said:

To be fair their income is close to £150k so £550k mortgage isn't that ridiculous overall but generally that number seems insane. Its not even at maximum lending which would be near £750k!

Which, at any point in the past 15-20 years, they'd have done very well tomhave taken.

Are lessons being learned or is your mate just a bit sharper than average?

Just found a house they liked and it happened to be less than their maximum borrowing power.

15 year mortgage too so they are planning to smash it out ASAP. They should be cleared by ages 45/47 for him and his missus.

[Pork]

p1stonhead said:

Just found a house they liked and it happened to be less than their maximum borrowing power.

15 year mortgage too so they are planning to smash it out ASAP. They should be cleared by ages 45/47 for him and his missus.

Very nice! Good on him.