The latest UK property news was bad yet again today, what’s new! According to reports online, average house prices have fallen by £15,000 in the last year. The report went on to say that this is the fastest rate by which house prices have fallen since 1991.

In effect this means the average price of a property has fallen by 8.1%. This is bad news for people that have potentially lost all that equity in their homes.

So where as before at there peak the average property was worth £186,000 this now means they are worth only £169,000, which is the lowest since August 2006. As a result of this downward turn largely caused by more expensive borrowing the fear of recession is growing.

Also another unwelcome effect of the credit crunch and property downturn is the increase of repossessions. It has been reported that they are up by around 40% with many banks rushing in to take advantage and secure some money back before making further losses. As a result around 9,000 homes were repossessed, the question is what do these people do now, many of which will probably have to rent which will fuel demand and probably the cost to rent.

So what can be done to combat downward spiralling property market? Well the treasury is proposing several ideas to boost house buying.
1) An indefinite suspension of stamp duty,
2) The option to defer the tax
3) A scheme to introduce tax-free savings accounts, to help people to save for a deposit

So which option is favoured by property industry? The RICS (Chartered Institute of Surveyors) is behind idea of suspending stamp duty, stating that it would increase sales and increase lending.
Estate Agents are also up for the idea according to reports, but are worried that if the government doesn’t implement the change soon buyers will hold off in the hope that they can save money, which of course will have an added detrimental impact on the property market.

So what are the stamp duty levels currently at?
From £125,001 - £250,000 it is 1% of the value
From £250,001 - £500,000 it is 3% of the value
And £500,001 upwards it is 4% of the value

My opinion is that the suspension of Stamp Duty will be a good short term fixed but I am not convinced it is enough to quell the storm so to speak. I feel the something more substantial needs to be done to improve demand and give people who are at risk of losing their homes more support.

Related posts:

1. Property sales continue to plummet
2. UK Property News July 02 2008
3. UK Property News June 03 2008
4. Be patient when saving to buy a property
5. Property News Round Up 9th June 2008