With the benefit of hindsight, the UK housing market possibly did not need a stamp duty holiday in July 2020, four months into the pandemic, according to Tom Bill, head of UK residential research at Knight Frank.
He points out that trading activity was strong during successive lockdowns as people reassessed how and where they lived.
Some form of UK-wide support would certainly be welcome now though, given the negative events supressing demand, he added.
Bill said: “We will find out if the government has a plan in the Autumn Statement later this month.
“In the meantime, the number of UK mortgage approvals was more than a third below the five-year average in September and transaction volumes were down by just under a quarter.
“Unlike the early months of Covid or the period following the mini-Budget, there is no single cause of the slowdown. Sentiment has been affected by a series of factors including the financial pain of higher mortgage rates, the Bank of England’s struggle to contain inflation, the impending general election, and uncertainty arising from overseas military conflicts.”
The weak sentiment in the sales market means that some prospective sellers are hesitating and opting to let out their property instead, according to Bill.
Knight Frank’s David Mumby added: “Rents are at record levels but there are certainly signs that the unprecedented growth experienced over the last two years is starting to slow.
“Market shifts that normally take years have been condensed into just a few months, so hopefully a period of relative predictability will now prevail giving tenants and landlords alike more time to make considered plans.”
Makes a nice headline but not what Tom Bill said. He suggested some form of support and reflected on the measure taken after the pandemic, ultimately proving to be unnecessary.
Surely as an industry we should be considering and arguing for a range of options to help the market as it re-adjusts to the new reality of more sustainable interest rates in the medium to long term. These might certainly include a Stamp Duty holiday as a temporary boost, but what about changes to the tax treatment of landlords to encourage the BTL sector, boosting the first time buyer sector (Help to Buy etc), restoring feed in tariffs to their former level and much much else ?
We cannot point to a Stamp Duty holiday as if it is some miracle cure, and headline writers should avoid the same trap.
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Trouble is that home movers ended up paying far more for property and accumulating far greater debts than the savings ever represented.
If that were to happen again now, thousands more could get in to significant financial strife.
The market does not need another false economy to drive it, unless you want an even longer recovery that will likely close many more businesses and ruin many more lives.
Let it find its own feet and natural growth path without anyone playing with the fire. You’ll either get burnt or wet the bed.
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