Tuesday, 15 September 2015

House Prices in The Bush Hit a New Record - But Who is Buying?

Yours - for almost £4m
According to a recent story at shepherdsbushw12.com, property prices in the Bush hit a new record this year.  The average property price in Shepherd's Bush reached almost £700,000 in the second quarter of 2015.

But with the price of housing now far out of reach of most Londoners, and Stamp Duty at increasingly ridiculous levels (12.5% over £1.5m), who can afford to buy property in Shepherd's Bush?

The first part of 2015 apparently saw the highest sale price ever recorded in W12, when a four bedroomed semi-detached house in Goldhawk Road was sold for an eye-watering £3,575,000. Were this sale to be completed today, it would generate a breathtaking £342,750 in Stamp Duty. For most normal people, prices are unaffordable and the taxes payable are absurdly high.

Even if you are lucky enough to own your own home in the Bush, Stamp Duty is now so high that moving house just doesn't make any economic sense. It's better to stay put, and dig a giant hole underneath your house if you need more space. Digging basements is itself very, very expensive (and extremely annoying for your neighbours) - but at least you don't have to hand the money over to HMRC.

The trouble with this policy of massive taxes on the buying and selling of homes is that it completely gums up the jobs market.  I know this from personal experience because I was offered a great job earlier this year, only to have to turn it down when I realised I would have to work for many years just to earn enough to pay back the Stamp Duty I would pay on moving home. What would be the point?

It's not surprising then that the housing market is showing signs of stress, with inventory at record lows (who would move house now unless they were forced to?).  The average price of a normal terraced house in the Bush even fell a bit earlier this year, by 7.1%, from £943,725 to £876,625.  The price of flats also fell slightly, with a  drop of 3.2% from £505,109 to £488,876.

The chancellor seems to have decided that London property owners are a cash cow to be milked, but it is not all likely that this will raise more revenue. Absurd levels of taxation don't increase government revenues - people just don't buy or sell.

And now that the Government has effectively killed off buy-to-let as an investment, we can expect to see even less property available for rent at reasonable prices.


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