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Thread: Can property tax ease the high housing prices?
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[quote=APAULT,419833]Dodger suggests it not a free market because you can only buy 70 year leasehold'. Sorry Dodger but that's nonsense. The available product is property on a 70 year lease and potential buyers make their economic decisions according to their own analysis. That's a free market. There is no market for freehold as there is zero supply. Jimmy used the word 'bubble' when he raised the issue. A 'bubble' is not high prices, it is a situation with unsustainable high prices which must surely collapse. Is there a bubble now? Maybe a little as investors chase unrealistic profits and have a property orientation. I suspect that unrealism means there is an element of bubble in the current pricing but far more important is that there is a mass of hidden demand (ie wants at a lower price than prevails) for property and a still very limited supply. The unsatisfied demand exists from people who are in substandard homes, want to move out from the family, or want a larger home, or a home in a better location and so on - at present most people grab a home where they can. It is not a bubble if borrowers can finance their loans, if they can sell reasonably quickly without making a loss. In general there is no problem on these even though the demand might have slowed a little. So now to the tax. It's basic economics: it adds to the price and provided it's a free market, and essentially it is, there will be less demand at the higher prices. Could such a tax could prevent a bubble? It couldn't prevent a major bubble (such as the American Banks engineered which created the World Financial Crisis), but I don't think that's anywhere near the today's reality. Sorry about another lecture. :)[/quote]
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