Stamp Duty cuts won’t give the property market the boost it needs, an agency chief executive has warned.
Dominic Agace, chief executive of agency franchise brand Winkworth, is calling for Chancellor Jeremy Hunt to focus on policies to tackle the cost of finance, bring down inflation and increase the number of homes for sale and for rent in his Autumn Statement,
But he has stopped short of calling for Stamp Duty reform.
Speaking on Winkworth’s The Property Exchange podcast, Agace said: “Economically, we are at peak stress in terms of interest rates at the top of the cycle. With inflation predicted to go below 5%, we can now see the other side.
“It’s important that things aren’t changed for political gain to alter that trajectory. We have done some of the hard yards now and we don’t want to see tax cuts that might be inflationary – that will just feed back into higher interest rates, which is where the pain in the property market is coming from.
“Certain income tax cuts and VAT cuts would be inflationary and that is self-defeating. Inheritance tax and Stamp Duty are being focused on but I feel these are being used as electioneering promises. Families in London are being penalised by aggressive dialling up of the Stamp Duty tax at a certain level but in terms of next year, I can’t see Stamp Duty changes boosting the market.”
He said the real challenge is the cost of finance, which is an income or cash flow challenge rather than a transactional challenge, adding: “The best thing is to push on with policies that ensure inflation gets down to a target and interest rates can start to move down. The banks and mortgage providers can follow that lead and reduce costs going forward.”
The outlook for 2024 is looking positive, Agace told the podcast.
He said: “The market is faring far better than predicted. There has been a dramatic slowdown from 12 % increases year on year until last August and then 4% declines since then in flat prices but not in house prices. This comes back to the mortgage market and stress testing which has gone on since 2015. At the moment, prices are reducing but it’s a transactional challenge rather than a dramatic price change. We haven’t seen a price reduction in the past six months. On the buying side, we saw real wage growth above inflation wage growth, which is a positive.”
He said he is anticipating interest rate cuts towards the second half of next year and mortgage rates moving down to around 4.5%.
Agace said: “The property market is aligned with employment – the two critical factors in a successful, stable property market. The property market doesn’t stay in limited activity mode forever. Two years is a long time if you look at historic trends. Next year and certainly towards the second half, we will see a more positive impetus in the property market.”
Download the full podcast: https://podcasts.apple.com/gb/podcast/the-property-exchange/id1569362828?i=1000634588603