tisdag 16 januari 2007

Halifax reports soaring property prices

And so we have another report - this time from Halifax - to tell us how the price of housing keeps going up. (yesterday's Guardian, article by Angela Balakrishnan)

As mentioned in an earlier blog, it is not the price of bricks and mortar that has gone up. The most expensive bricks are still less than 75p each, cement is under a fiver a bag and there are plenty of building workers following the influx from eastern Europe. What keeps rising is the price of the land the houses are standing on.

It is worrying that so little is understood about this phenomenon by campaigners and and economists, as they demonstrate when they argue for a tax on property or land price gains.

How would this be implemented? When would the tax be an increase in value from? Since the previous year? Since Domesday? Since the previous sale? And why not on the whole value?

And when would the levy be paid? Once in a while? Every year? At the time of sale? And if the increase in value turns out to be a bubble value, what happens when the bubble bursts? Will property owners receive refunds?

There is certainly a case for taxing land values, but there are many wrong and harmful ways of doing it and only one right way. Those in favour of land taxation should think through the implications of what they are proposing.

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