Unprecedented Property Price Rises

Unprecedented Property Price Rises.

The Royal Institute of Chartered Surveyors (RICS) has surveyed over 300 members to find that property price increases and demand are at their highest rate for 11 years.

Surveyors suggest that demand is soaring and “dwarfing” supply of property with a property price explosion already in motion.

RICS have called on government for immediate action to prevent a property price bubble. 

Comment

We are all know the basic causes, property prices have fallen over the last few years during the credit crunch, people have been saving up capital for deposits in the meantime and now the government has introduced the “Help to Buy” scheme not just for 20% deposits for first time buyers but also now the Help to Buy high loan to value mortgage insurance scheme for all other types of property and borrower.

We have already suggested there is a conflict of interest here in government policy.

1. Government stands to gain from property price rises in the share of the profits it will receive when Help to Buy Scheme homes are subsequently sold
2. Government stands to gain with increased stamp duty revenue from increased property value sales
3. Government stands to gain from increased capital gains tax revenue from the sale of second homes and investment properties
4. Government stands to gain from increased inheritance tax revenue from estates that include high valued properties
5. Government stands to gain with less liability in state owned bailed out banks and the increased share prices as toxic debt reduces
6. Government stands to gain by overall inflation (the old RPI measure includes property/mortgages) as inflation devalues public sector debt without every repaying it.

We could go on ……

A property price rush is on its way, make no mistake and we believe whilst government rhetoric will be one of control and management, the underlying intention is to allow property values to fly.

If you have not bought or invested yet, do so soon before it is too late.