Here is an example of how the house price may be affected by interest rates or tax rates. What impact can a tax rate have on house prices.
The UK Chancellor, Alistair Darling is expected to prevent a cut in the capital gains tax (CGT) because there are fears that a tax rate cut may spark a second-home boom, which might make the housing unaffordable to many.
There are strict warnings from a few that property and mortgage market speculators will use the tax reduction to drive up the price of rural housing, making it unaffordable for the common man, who really need a housing shelter more than a speculator. They spoke out after Stuart Burgess, the Government's Rural Advocate, urged the Chancellor to scrap the reduction in CGT on second homes from 40 per cent to 18 per cent.
The Campaign for the Protection of Rural England (CPRE) warned the move could squeeze more people out of the housing market. Kate Gordon, a CPRE spokesman, said: "Property in rural areas should go to people in housing need. There is a large shortage of affordable housing at the moment. Reducing this tax will lead to a wave of speculation and it could fuel further price rises.
"The Chancellor needs to assess the implications of these changes and we are not sure he has thought this through properly."
Tim Farron, the Liberal Democrat spokesman on the countryside, said: "While taper relief was unfair and regressive, the new system still taxes income at a lower rate than capital. This will further encourage the wealthy to invest in second homes, which will badly affect many rural areas."
| It is difficult times for the world economy and UK cannot stay behind. However, these tough times prove to be good learning opportunities about how we should look at the markets, whether they are stock markets, bond markets, house and mortgages, loans, etc. These are the times when big shots sitting in the government are expected to deliver and take necessary actions. Hope to see these problems going away soon. | Table of Contents |
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