In today’s world, this exercise would likely be banned for some health and safety reason, but that’s beside the point.
The point is that house prices are soaring. So, if the principle stands, this means they will eventually fall again.
In its latest monthly survey, Nationwide, the world’s largest building society, revealed that house prices are up 5.8 per cent from this time last year. That figure is up nearly 1 per cent from just a month ago.
If this rampant rise isn’t enough to make even the most resilient of investors nervous, you should take into account the recent turnaround from George Osborne on the Government's policy towards property.
The chancellor is considering applying capital gains tax to sales of properties with foreign owners in an effort to slow the rise of house prices in London and the South-East.
As anyone who has been trying to get on the property ladder in this area knows, many of the prime properties are being snatched up left and right by wealthy Russian oligarchs and Middle Eastern oil barons.
These owners, however, are currently exempt from tax on all properties, while British owners are subject to a 28 per cent tax on capital gains if they make a profit from selling a property that is not considered their main abode.
Osborne’s move is in stark contrast to the Government’s Help to Buy scheme, which offers buyers access to loans with as little as a 5 per cent deposit. Experts have argued this scheme is artificially bloating the prices of property and so will put the next generation of homebuyers into debt even more.
While house prices are still 7 per cent below their peak in 2007, we can’t ignore the lessons learned from the past. Eventually, this surge in house prices will reach a breaking point and I wouldn’t want to be caught out when it does.
In this month’s edition of Investazine, we spoke to the lone FE Alpha Manager in the property sector, HSBC’s Guy Morrell, about what the prospects are for the UK market.
Other major news in the past several weeks includes the departure of star manager Neil Woodford from Invesco Perpetual. As Woodford runs £20bn in his flagship Invesco Perpetual High Income and Invesco Perpetual Income funds alone, it’s safe to assume many of our readers are exposed to him in some way or other.
Investazine also offers guidance about life after Woodford and highlights some of the other leading managers in the business.
To find out more, download the latest edition of FE Trustnet Investazine here:
FE Trustnet and FE Trustnet Investazine nominated for awards
On another note, we are pleased to announce that we have been shortlisted for three awards for excellence in financial journalism, the winners of which will be announced in the coming weeks.
FE Trustnet has been shortlisted for the Financial Trade/Professional Website of the Year at the 2013 Santander Media Awards.
The team has also been nominated for the IMA Team Awards for Excellence in Investment Writing.
We are particularly excited to announce that our recently launched digital magazine, FE Trustnet Investazine, has been shortlisted for News and Business Magazine of the Year at the Digital Magazine Awards 2013 alongside leading financial publications such as the Economist and FOCUS-MONEY.
