Stamp duty cut in today's "mini" budget

Firstly, it's a huge relief that this is a permanent change and not a holiday like last time, which leads to chaos in the housing industry. For non first-time buyers it's going to give them a saving of £2,500 on their stamp duty bill, which will be a welcome change given how fast house prices have risen in the past 18 months. For first-time buyers, the increase to the limit is likely only going to help the already wealthy and won't benefit the masses. Ultimately, given it's not a huge saving and only benefits a small number of first-time buyers, I don't see this as a repeat of last time when the housing market sent supersonic. The lack of supply of houses available for sale still remains a real issue and a £2,500 saving for someone to move doesn't seem like a huge incentive given how much more expensive mortgages have become.

I despair, I really do. The housing market doesn't need to be artificially supported. We have seen eye-watering property price inflation for years. Culturally, we need to adjust our perception of property. Enabling the onward march of property prices only exasperates and alienates those trying to buy a home. Stagnation rather than inflation is what we need. The Stamp Duty holiday proved to be unnecessary and actually fuelled the housing problem and again the Government has stepped in to address an issue that hasnt yet arisen. You could argue this is simply a cynical move to try and make us feel better because the UK population associate the value of their home with their financial position. "If houses are selling, I'm ok". It is a short-term move that will only add to the problems faced by people trying to buy a home.

The increase in the stamp duty threshold to £425,000 will certainly jump-start market activity again as this accommodates buyers in the higher price range. With reduced buyer costs, sellers will likely command a slight raise in their asking prices. However, the stamp duty tax cut is not the only factor that will affect house price growth since the Bank of England has already announced an interest rate hike this week. Nonetheless, as with what we observed in last year’s stamp duty holiday, there’s no guarantee that the properties in different price bands will have similar reactions to the tax cut. The impact will be felt more on the number of transactions instead. We forecast that the combination of these factors will raise house values between 3% to 4% before the year ends.

On the face of it, this looks like a good move, however, if this means that demand increases and therefore, house prices increase, then the extra money paid for the house price will be more than the actual saving made in the Stamp Duty. It will also mean more deposit being put down and/or a higher mortgage, which means more interest in the longer term.