property market’s fortunes are in the Chancellor’s hands
The housing market mini-boom shows no signs of slowing. Despite the ongoing pandemic and increasingly gloomy news coming out of the high street, Nationwide Building Society reports that property prices are rising at their fastest rate in nearly six years. The annual rate of growth was 6.5 per cent in November, a month not commonly known for being a busy one for the housing market as people get distracted by the run-up to Christmas – up from 5.8 per cent in October.
positive impact of the stamp duty holiday
The stamp duty holiday, which runs until the end of March, is focusing many buyers’ minds on getting that bigger property with more space, either inside and/or out. Nationwide said that the experience of lockdown, which convinced more people of the benefits of living in the country rather than more urban settings, was behind the surge in prices. Houses in national parks now command a 20 per cent premium to those outside these areas.
While this stellar performance is more than any of could have hoped for during the first national lockdown when the housing market was frozen for six weeks as it was forced to close completely, it would be unwise to get carried away. The Nationwide figures clearly reflect the positive impact of the stamp duty holiday, coupled with a strong underlying demand for home ownership, and continued support by the mortgage sector. But this good work must not be undone.
Confidence is crucial to the market and remarkably, there is plenty of it, for now. Halifax’s House Price Sentiment Tracker reveals that UK households remain broadly confident in the strength of the property market. People also remain cautiously optimistic that property prices across the country will be higher in 12 months’ time.
But more than ever the prospects for the market are in the hands of the Chancellor. As the first quarter of next year draws to a close, we will have the end of the furlough scheme, the removal of the stamp duty break and the Budget; will Rishi Sunak really take that opportunity to hit the economy hard?
continued government support needed
The recently mooted changes to the capital gains tax treatment on property should be shelved, lest the Chancellor risk significantly reducing the supply of property coming to market. Equally, the stamp duty holiday should be extended past March to continue to encourage first-time buyers, as well as other homeowners, to transact. With unemployment figures expected to soar and the full impact of the recession yet to bite, there remains a very real risk of a serious dip in the market without the continued support of the government.
We have said before how important the housing market is to the economy. Removals firms, estate agents, construction sites, various trades, hardware stores and builders’ merchants – the employment of many builders, plumbers, electricians, architects, advisers and the like are all vital for the economy. It is important that those jobs and sectors which are thriving are able to continue to do so.
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