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Property: House prices too volatile for Europe

Saturday 22 November 1997 00:02 GMT
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Taxes on house sales and property ownership should be raised to help the UK join a single European currency, according to a report published yesterday. The rollercoaster rise and fall of house prices could make it difficult for Britain to take part in the project, the Economic and Social Research Council said.

It recommended a package of measures including an "automatic" tax on sharp rises in the value of a home and higher stamp duty. The volatility of the market - from the 1980s boom through the 1990s crash and the latest surge - is driven by the high level of borrowing allowed by lenders and low transaction costs, it found.

The authors of the ESRC report, Professor John Muellbauer and Dr Anthony Murphy, said reforms such as higher stamp duty, tougher controls on lenders, and a "significant property tax" could make it easier for the UK to join economic and monetary union (EMU).

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