Housing market: beware the Budget’s knock-on effects

The rise in consumer spending that was expected as a result of lowering interest rates hasn't been enough to "lock in" the recovery (it is just delaying the pain for some business and individuals). What many people don't realise is that most of the country's wealth over the last decade has been extracted from the rising housing market (via sales or equity release) at the expense of people at the bottom of the market. With assets prices now falling the banks are weakened and there is also less money for people to spend on goods from profits they've made in, frankly, the easiest way possible.

I hope this will be a massive learning experience for everyone that the housing market is not an endless cash cow and that you should have a skill in order to make money.

Put capital gains tax at 75% for 2nd homes, even if it is the first home of the spouse. Only allow housing associations to own more than 3 houses. That would knock house prices down to affordable levels and keep them there. Housing isn't just a commercial thing, it's a social need and should be treated differently to other commercial assets. This is done reasonably successfully with the water supply, so I don't see any reason it shouldn't work with property. Oh, I forgot, greed gets in the way doesn't it!!

Why is this entitled 'Housing market beware' not 'House Buyers something to look forward to'? House prices are generally accepted as being overvalued, why is it that we should 'beware' not 'look forward to better prices'?

Amen to that Jonathon. Warren Buffet points out that in a supermarket everyone rejoices if prices are cheap whereas with stocks and property people lose their heads and get it backwards. Personally I'm leaving the country that gave me my skills and am taking them to Brazil. Why should I remain in a country that expects me to go into debt for the rest of my life in order to buy a two or three bedroom house, whilst freely devaluing my savings year by year through money printing? On top of that my taxes have to go up to pay for the excesses of a bunch of financial 'innovators' who nearly sent us crashing back into the bronze age. It's state organised theft. Last one in Britain under the age of 40 (without wealthy parents) turn the lights out...and let the old enjoy living in an expensive asset that they never intend to sell.

I agree with Jonathan and sympathise with Rajah. I am actively looking into relocating to Zurich, where my skills and qualifications match, to achieve a better way of life.

It is still possible that Mr Cameron may yet surprise us in the way that Mrs Thatcher did in 1979 and actually do something about the mess we are in but I am not holding my breath given the vested interests around him.

Has anyone got space in their suitcase for me.......

Rajah, The reason people rejoice about low prices in Supermarkets is because the spermarkets have the goods and the people want to buy, as with property & equities most people own some of one or another through their home and/or pension. Apples and oranges come to mind.

As far as why you shouldn't leave the country that educated and trained you, how about the fact that both those two things cost the tax-payers of the UK plenty of money, maybe you owe them something and should pay it back in taxes. I'm just throwing this in as a point of view, I'm not saying this is my PoV, just throwing it in.

BTW I was educated and trained in the UK, but live in the Carribean. Mind you I am a UK landlord and pay UK tax on my income there.

Good luck in Brazil, I hope everything goes well for you and that the article I read yesterday about Brazil and recession doesn't come to pass and bite you in the bottom.

Dear Colin

I agree under normal circumstances...it would be disloyal to leave. But the young(ish) have been sold down the river. Actually I don't believe my education did cost tax payers much. I didn't get a particularly good secondary education at my local comp and I paid for my university education through loans. So my conscience is pretty clear. I'd be more than happy to pay taxes into an economy that utilised them well and provided people with a positive future. Here I feel the government sees me in terms of my lifetime tax yield rather than a citizen whose needs it should attempt to serve.

The promised next five years (or more) of extreme austerity are to pay for the excesses of the banking community and the housing boom they fed off. I didn't benefit from that feeding frenzy so don't really feel like paying for it!!

Whatever happens, Brazil has the next World Cup and the 2016 Olympics so things aren't going to be all bad! :-)

BTW How many hedge-fund managers do you reckon pay taxes in this country?!

Property price crashes just never happen, well they dont last long. I can see why there should be a correction and in many parts of the UK property will be stagnant and maybe drift lower, but where there is employment house prices never really dip and I cant see why now it will be any different, despite all the negatives, theyve always been around in one way or another. The markets will adjust and new products will come out and low and behold we will be back to buying and selling again. The cap on housing benefit is seriously to be applauded, and this I think will bring down some house prices where it will become uneconomic for serial property landlords subletting to housing associations for extortionate rents on really below average property, these properties appear at auction regularly and in some cases are five years old but have been trashed and so demolition or a quick refurb and let back to another housing association beckons. In London it is going to be very interesting to see how such landlords will be affected by the new housing benefit rules.

Just some basics from a surveyor. why mortgate if the values do not go up and you have the repair liability, insurance etc if you can rent for same money with no risk. values are not goingup except in the areas effected by unusual circumstances and money from abroad is coming in-but prices in thee areas are usually3 to 5 times the national average so statistically are not reliable, howver sexy and newsworthy. real truth is the market is sour-the cream has gone and the wey is left for others to either deal with and make a soufle or its wasted - just like 1oo's of flats built as prime investments.

This is a new era -wake up to this its about reality - what can you afford. If you want a good life satay with Mum and dad- if you want to have a flat wake up to responsibility- and rent and council tax.

The scroungers will be sorted ...and yield and value in residential will have a reference

Linton, you have not done much homework have you.

The silly rents paid for DSS, tenants to lucky landlords, only happens in London and the Home Counties. I have rented to DSS tenants, never again, I would rather sell first. However, the rents, which are always lower than private, in my area, for unfurnished, amount to no more than £3700 pa for a two bedroom terr. 3 bed terr £4420pa, 4 bed det £7200.

Like you, Joe public think we are all making fortunes, I wish.

Same here. I let a couple of properties in Merseyside, and get £6000 p/a for a 4 bed property. This property has been trashed twice, and is more of a liability than an asset. I am an optimist however, and right now have a decent tenant, I hope.

Things aren't always as they seem.

The Socialist benefits system as built by Bigot Brown is responsible for most of the woes of the UK along with the greed of bosses and expenses fiddling politicos.

Who can blame a single female parent who can get a decent "wage" from the state without having to give any male pleasures for it....whilst having total freedom to put it about after visiting the local disco.

The fact is "marriage" and the stability to relationships it bring should ALWAYS be a better option financially that the Single Parent (usually female) Option.

The State is to blame for the state we are in. End of Story.

Bigot Brown has consolidated the creation of a Benefits Monster with mistaken charitable beliefs. Good to tell he has never had a proper job.

Democracy has been tainted by Scots MP's who should not be in our English parliament - they have theire own and ditto WAM's.

At least Madame Tussauds has seen fit not to put up an effigy of Bigot Brown supposedly because he was never voted in as PM but one suspects because it would be massively vandalised by all those sections of society he has abused over the years. A hated man indeed. AS indeed was the other Nu Labour plonker Tony "I'm now costing you a fortune to protect me" Blair.

And still abused Equitable Life Pensioners await the compensation the Ombudsman says they are due...........