The Latest on UK House Prices in 2010

Well, a few interesting things have happened since I last put pen to paper on UK house prices, well, 2 really, to be precise.

Firstly, the Land Registry issued its house price index for February, which confirmed the fall recorded in the indices of Nationwide and Halifax. The Land Registry index -- which is based on actual sales, not mortgage approvals like those of the lenders -- said prices fell by 0.3% in February. This is a fair bit less than the falls of 1% and 1.5% recorded by the lenders.

Secondly the Chancellor of the Exchequer, Alistair Darling revealed his 2010 budget, in which he once again raised the threshold of stamp duty on house purchases. Before the credit crunch, anyone buying a house for more than £125,000 would pay 1% of its value in stamp duty. By way of "stimulating" the housing market the threshold was raised to £175,000 in late 2008. It was dropped back down to £125,000 January 1 2010.

Now and for the next two years first time buyers will pay no stamp duty will be paid on any property bought for less than £250,000. There have been two main responses to this so far as I can gather:

One and the main (for me) is the uncertainty over how this is going to be regulated, the room for fiddling it is potentially huge. No one who has previously owned a home in the UK or abroad will be eligible, but I may have oned and my new girlfriend hasn't so she will be the buyer, and others have asked about people who have changed their name by marriage or by deed poll etc, not to mention the problems with finding out about ownership overseas.

The other is the fact that houses that are worth £251,000 - £260,000 have effectually had their values cut to £250,000.

Problems with regulation aside, I think that raising the stamp duty threshold for first time buyers is a good move, because it is this buyer group, which has still been struggling to afford the first rung on the ladder -- largely because of the hefty deposits needed to get finance. While the value of homes just over the threshold have effectually lost value, first time buyers have effectually been given £1,250 - £2,500 to add to their deposit savings.

I am not gonna even say that this could have a big impact on the housing market, because I personally think houses are still over-priced on average in most of the UK, but it could certainly have some kind of impact on the market.

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