A Stamp Duty holiday would be more beneficial now than at the start of the pandemic, Knight Frank has suggested.
The latest market commentary from Tom Bill, head of UK residential research, for the agency brand, said there are plenty of events keeping demand down.
It comes as analysis by Knight Frank revealed activity in prime central and outer London this October was similar to the same month in 2022, a moment of high uncertainty after the mini-Budget.
The number of new prospective buyers registering in London was only 1.2% higher, exchanges were 2.2% higher and the number of viewings was 1.4% lower annually.
Average prices in prime central London fell 1.6% in the year to October, with 1.2% of the decline taking place in the past six months.
Meanwhile, activity in prime outer London (POL) was supported more by needs-driven buyers, according to the research.
That said, average prices in POL fell 1.4% for the second consecutive month, the biggest drop since February 2021.
Bill said: “With the benefit of hindsight, the UK housing market possibly didn’t need a stamp duty holiday in July 2020, four months into the pandemic. 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. 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.”
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A stamp duty holiday would probably provide a short-term boost to the market, but it would be a 'sugar rush' that would not address the fundamental problem of affordability. Transactions have collapsed because the increase in interest rates to more realistic long-term levels has exposed the over-inflated nature of the property market caused by a combination of cheap money and ill thought through schemes like Help to Buy and the previous stamp duty holiday;then exacerbated by Covid's 'race for space'. Affordabilty, in terms of the relationship between average incomes and average house prices, requires further price falls to restore a situation more akin to historic norms (recent ratios of 9x or even 10x simply proved that the market became greatly over-priced); until this happens, the market will continue to remain in the doldrums.
Stamp duty holidays do not work. Look what happened last time, the stimulus meant that market demand rose which also meant that property prices grew along with it. In reality, no savings were made, but property values became artificially inflated and we're now experiencing the resulting 10% fall in values.
Totally agree,and even increasing minimum wage increased cost of living so no-one better off,but they keep interfering with matters to make things worse.If we want affordable homes,we need to reduce demand and increase supply,so gap does not widen from first rung.
No-one makes a profit moving up,as differential grows by same amount for next house.
We need more houses,and be like other countries,who do not have so much interference.
The Spanish welcome holiday homes,continuing building,even if not for locals,but visitors create jobs.Reducing rental supply by removing S21 will increase rents,when Shorthold tenancies created available,affordable rental properties
What would be far more beneficial would be to reintroduce some form of MIRAS............if only for first time buyers.
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