Reply to: Surprise fall in retail sales in December and January

[hugebrain]

Why would divi tax impact house prices?

The divi tax instantly makes all shares worse 7.5% less than they were before. This will cause the FTSE to plummet from its current frothy highs.

Some of the extra tax money will be used to increase the already > £25 billion/year that is handed out to property owners in benefits.

So, high net worth individuals are encouraged to shift from falling shares into booming property. Simultaneously, the stamp duty changes are forcing the wealthy to invest in dozens of smaller houses instead of single mansions. This will cause increasing homelessness and despair, but is also designed so property owners can charge higher rents and collect still more benefits. Meanwhile, May's brexit delays have encouraged the benefits-hungry hordes to migrate here in their millions.

Or something like that...

[BrilloPad]

Surprise retail sale fall as shoppers rein in spending | This is Money

Looks like UK growth, which has been powered by spending, is coming to a halt.

Less buying of imported goods....

[motoukenin]

Surprise retail sale fall as shoppers rein in spending | This is Money

Looks like UK growth, which has been powered by spending, is coming to a halt.

Powered by credit card debt more like

[sasguru]

And the rest. If you expect to pay that much on an overinflated price it's no wonder you think the market is softening.

As a cash buyer you should be looking at 90% of the asking at max. And that's only if the asking price is near sensible.

Depends on the area and the demand. Note I said at least.

[GB9]

Why would divi tax impact house prices?

BTL mortgage relief is not yet in place. It will be phased in over the next 3 years.

Mortgage rates have barely risen. They fell to all time lows in late-2016 but have since popped back up a very small amount. You can still get resi mortgages at 1.25%.

The big risk factor is the mortgage relief, which will hit the market hard but not just yet.

Because a lot of people will have less disposable income, won't they?

And mortgage rates may not have gone up much but they aren't coming down further. I keep hearing people state that they are still near a historic low and as a result, house prices should rise again. Why? It should keep prices the same but we are back into the mentality of each house sells for 10% more than the last equivalent house.

[GB9]

I don't know the answer to why property is beginning to soften, but after > 20 years in BTL I sense a softening similar to what I felt in 2007.
I will test the market further now, this time as a buyer, because now I've sold main prop I need to buy something - the idea is to cash in the money I made renovating it and buy something cheaper but still nice enough - and one that I can rent out when I move abroad.
So let's see, at the 800K mark I'm looking at , I fully expect at least 50K off.

And the rest. If you expect to pay that much on an overinflated price it's no wonder you think the market is softening.

As a cash buyer you should be looking at 90% of the asking at max. And that's only if the asking price is near sensible.

[sasguru]

But what we're they asking to start with? The ones that came on this time last year were asking 15% more than the previous year's selling price. Since then we have a dividend tax, btl tax subsidy reduction and mortgage rates rising. I struggle to see any way prices can keep rising at 5%+ over inflation.

Why would divi tax impact house prices?

BTL mortgage relief is not yet in place. It will be phased in over the next 3 years.

Mortgage rates have barely risen. They fell to all time lows in late-2016 but have since popped back up a very small amount. You can still get resi mortgages at 1.25%.

The big risk factor is the mortgage relief, which will hit the market hard but not just yet.

I don't know the answer to why property is beginning to soften, but after > 20 years in BTL I sense a softening similar to what I felt in 2007.
I will test the market further now, this time as a buyer, because now I've sold main prop I need to buy something - the idea is to cash in the money I made renovating it and buy something cheaper but still nice enough - and one that I can rent out when I move abroad.
So let's see, at the 800K mark I'm looking at , I fully expect at least 50K off.

[ChimpMaster]

But what we're they asking to start with? The ones that came on this time last year were asking 15% more than the previous year's selling price. Since then we have a dividend tax, btl tax subsidy reduction and mortgage rates rising. I struggle to see any way prices can keep rising at 5%+ over inflation.

Why would divi tax impact house prices?

BTL mortgage relief is not yet in place. It will be phased in over the next 3 years.

Mortgage rates have barely risen. They fell to all time lows in late-2016 but have since popped back up a very small amount. You can still get resi mortgages at 1.25%.

The big risk factor is the mortgage relief, which will hit the market hard but not just yet.

[GB9]

Sold all 3 properties 2 at asking, main one I had to drop by 5% (but still made about 400K profit on it in 5 years after doing it up). Pity the fools with mortgages though.
But look at the number of reduced properties on any website.

But what we're they asking to start with? The ones that came on this time last year were asking 15% more than the previous year's selling price. Since then we have a dividend tax, btl tax subsidy reduction and mortgage rates rising. I struggle to see any way prices can keep rising at 5%+ over inflation.

[LondonManc]

Yep, it's a perfect storm of factors heading our way.
Don't forget increased austerity and spending cuts too.

Unless spending cuts provide an opportunity cost to the consumer, that won't matter.
Disposable income will also have been affected by a slight increase in interest rates; take £50 a month out of every family on a non-fixed mortgage and that's quite a wedge off the high street. That's in addition to the increases in fuel prices which dents other spending.

[sasguru]

I recently read that the overall UK tax burden is now the highest on record for average earners, and business rates have also recently increased.

Perhaps that could have something to do with it.

Yep, it's a perfect storm of factors heading our way.
Don't forget increased austerity and spending cuts too.

[OwlHoot]

December sales figures showed the biggest drop in 20 years. Novembers fell too.

Something more fundamental happening here.

I recently read that the overall UK tax burden is now the highest on record for average earners, and business rates have also recently increased.

Perhaps that could have something to do with it.

[sasguru]

Could this have anything to do with the ridiculous Black Friday sales that happen before Christmas, thus clearing the masses out of their hard-earned wages before the January sales start?

Same money being spent, just at a different time.

December sales figures showed the biggest drop in 20 years. Novembers fell too.
Something more fundamental happening here.

[sasguru]

You mean you asked 20% more than the last equivalent sale and it didn't sell? House prices are funny like that.

Sold all 3 properties 2 at asking, main one I had to drop by 5% (but still made about 400K profit on it in 5 years after doing it up). Pity the fools with mortgages though.
But look at the number of reduced properties on any website.

[Chuck]

Could this have anything to do with the ridiculous Black Friday sales that happen before Christmas, thus clearing the masses out of their hard-earned wages before the January sales start?

Same money being spent, just at a different time.