House price boom ripples out of London, across Britain

An article from the Telegraph reveals that the housing boom was spreading across the country. Property sales in the first three months of 2014 reached a six-year high as the market recovered on a “truly national” scale.

Average House Prices Going Up
Figures from the Office for National Statistics show the average UK house price stands at £254,000, up from £194,000 five years ago. The average London house price is £458,000, up from £301,000 over the same period. Prices are expected to rise by 25 per cent to 30 per cent over the next five years.

Royal Institution of Chartered Surveyors (Rics) has pushed up its forecast for national house price growth this year from six per cent to eight per cent. Its surveyors were most optimistic about price rises in the East Midlands and the North West.

Mr Rubinsohn said he was “hopeful” that there would not be “runaway” growth on the scale experienced in London, where some boroughs have recorded annual increases of 30 per cent, according to Nationwide.

Rise In Registrations of Interest
 Rics is also reporting a rise in registrations of interest as new buyers emerge to strengthen demand. The strong market is being driven by “easier credit”, with first-time buyers able to “reap the benefits” and, in some cases, step on to the property ladder with smaller deposits. This has been aided by government schemes such as Help to Buy.

Rapid Growth in Demand Not Matched by Supply
However, the rapid growth in demand is not being matched by supply of either new housing or homes coming to market, Rics warns. A resurgent housing market has reignited debate over the need for a property-related tax, with revenues from stamp duty, inheritance tax and capital gains tax predicted to rocket.

Lib Dem's Mansion Tax
On Wednesday the Liberal Democrats unveiled revised plans for its controversial mansion tax, which would hit tens of thousands of property owners. Danny Alexander, the Chief Secretary to the Treasury, said a charge on properties worth more than £2 million, which is being prepared by Whitehall officials, could be introduced “quickly” after the next election. The tax would slow the rise in property prices and “release a bit of steam” from the top end of the property market, he claimed. A mansion tax is a cherished Liberal Democrat policy and is likely to be at the centre of any future Coalition negotiations.

George Osborne is understood to be sympathetic to a levy on high-value homes but the measures have been resisted by David Cameron. Critics say the policy will hit elderly homeowners whose houses have risen in value but who do not have high incomes.

Up to 82,000 Homes Could be Hit
The Treasury estimated last year that about 55,000 homes were in range for the tax, but a new analysis by the property website Zoopla, also published on Wednesday, calculated that the levy would hit 82,000 homes. The Liberal Democrats originally proposed a one per cent annual surcharge on a property’s value above £2 million, meaning the owner of a £3 million house would pay £10,000 a year.

On Wednesday the Lib Dems rebranded the measures as a “high-value property levy”. Under the new scheme, houses worth more than £2 million will be taxed under bands which could be as wide as £5  million, reducing the scope for appeals. The scheme would contain “safeguards” to protect pensioners with high assets but low incomes.

Analysis
It is strange that a political party like the Liberal Democrats is only focussed on taxing and taxing.  Doesn't it miss the point?  Nobody seems to be interested to fix the underlying demand and supply problem.

You can see that such a 'mansion tax' could be use to stir up heated passion amongst the working class British, to focus their attention against the rich owners of expensive mansions as well as foreigners.  That is UK politics for you.