What will it mean for house prices?

THE stamp duty cut is likely to increase activity in the housing market as it puts home ownership in reach of more first-time buyers.

Some experts have warned that the move could push up house prices further still.

Pete Mugleston, managing director of Online Mortgage Advisor, says :‘ These measures will make it easier to get on the property ladder, increasing the mortgage options for a lot of people. That being said, this is a relatively short-term solution to the current issues in the housing market. The risk is that these measures could worsen inflation and drive up house prices even more, making it harder longterm for first-time buyers to purchase a property.’

Stamp duty holidays in the past have heated up the property market and contributed to rising prices. The one introduced by Rishi Sunak in 2020 when he was Chancellor helped boost prices by an average of 8.5 per cent – the highest increase in some years.

The reaction to Friday’s cut is likely to be different as it is permanent with no deadline by which buyers scramble to complete.

The boost from the stamp duty cut will be set against a number of other factors working against the property market.

Mortgage rates are rising, leading to lower affordability. Prices have been rising at a rate that many see as unsustainable.

The average house rose in value by £39,160 – or 15.5 per cent – last year to £292,118, according to the Land Registry. Alongside the stamp duty announcement on Friday, the Chancellor committed to accelerating the building of new homes, which should help to make housing more affordable by increasing the supply.

He said that later this autumn the Government would set out a plan to ‘unlock home ownership for a new generation by building more homes in the places people want to live and work’.

This will include selling surplus Government-owned land.