CONCERN for the lot of homeowners rises steeply when there is talk of a general election, with politicians doing what they can to show they care.

The Tories have this week pledged to raise the inheritance tax ceiling from £300,000 to £1 million – thus exempting thousands of family houses. To help first-time buyers, the party would also increase the stamp duty starting level from £125,000 to £250,000. This new focus on the tax burden borne by homeowners comes as something of a relief, amid yet more downbeat news on property prices – and also the warning from HBoS, owner of Halifax, that bargain-basement mortgage deals could become scarce irrespective of what happens to interest rates.

The warm reaction to the Tories’ proposals means that the Government will find a way to cosy up to both existing and would-be owner-occupiers in the Autumn Budget. A lower rate of inheritance tax is a possibility, as is some sort of stamp duty sweetener. This would rebut accusations that the Government has done little for first-time buyers who were this week described as a “new class of the poor – well-educated, hard-working and well-paid but with little or no chance of getting a home of their own.”

But the Chancellor will not wish to dwell too long on the stamp duty rules for fear of drawing attention to the money raised by this tax, or its effect on the housing market. Stamp duty revenues have more than doubled in five years to a record £6.4 billion, but don’t expect Alistair Darling to quote this figure.

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• Average prices in the South are 1.59 times higher than the North

• The City’s ardour for status homes remains unabated

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• It's bonus time, let the stampede begin

• Prices and politics either side of the border

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A reluctance to pay stamp duty has helped to bring about a shortage of family homes for sale, fuelling the price spiral. The buyer of a £2 million Notting Hill house, similar to that in which George Osborne, the Shadow Chancellor, resides, could expect an £80,000 stamp duty bill – a good excuse not to move. But a £22,000 stamp duty shock lies in wait even for the prospective purchaser of a £550,000 home.

There remains a dearth of properties for sale, despite the market’s less ebullient mood. Some predict that this shortage could worsen if the Tories gain power and deliver on their tax promises. If families were no longer forced to sell their parents’ properties to clear inheritance tax bills, many might settle down in these properties, creating a new trend for staying put.

The Tories’ tax proposals would be funded by a £25,000 fee on the “nondoms”, wealthy foreigners working in finance, playing football or running shipping companies, while enjoying the blessing of generous tax breaks. The charge would not be onerous, equating to the cost of a few feet of the £4,000 per sq ft Belgravia apartment designed for nondom tastes; in other words, the space occupied by a chair.

As a result, this is probably the least important of all the property tax changes that will be debated over the next few weeks.

CHRISTMAS IS OFF

Christmas may still be still 79 shopping days away but forecasts for the market in 2008 are already starting to emerge, with predictions of a further widening in the North-South divide and more slackening in the already sluggish pace of price rises in the Midlands.

Northern Ireland still leads Nationwide’s annual house price growth survey with a rise of 42.6 per cent. However, this is expected to slow to just 8-15 per cent next year. After the party, the hangover, you might say. London’s rate of growth – currently 16.5 per cent – is also set to moderate, although Nationwide still forecasts an increase of 8-11 per cent in 2008. None of these forecasts may set the pulses racing, but they are not the signal for misery either.

BET YOUR BOTTOM DOLLAR

“The market is in freefall, with price declines accelerating; the downside is substantial.” This is how one economist has summed up the current state of the US housing market. The surging rate of foreclosures or repossessions alone would be sufficient reason for his gloom. One in every 224 families in California is at risk of losing their home, victims of the US sub-prime mortgage scandal who have succumbed to crippling debts.

These gloomy statistics, however, are provoking an unexpected response among some (brave or foolhardy?) British buyers who are willing to take a gamble on further price falls in the hope of long-term appreciation. They are joining live online auctions to buy second homes, exploiting not only the weakness of the dollar, but also the desire of cash-strapped developers quickly to offload unsold but attractive condominiums at a discount.

You may be not filled by this latterday pioneer spirit. You may also feel uncomfortable at the idea of gaining from another person’s misfortune. But you should still take a look at the lots for sale on the website of one auction firm David R. Maltz & Co (www.maltz.com). They sum up the tragic story of the sub-prime affair better than any economist. anne.ashworth@thetimes.co.uk

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