england property market on a stamp duty powered rollercoaster
News Posted On: 24 March 2010
After a 2009 which exceeded the expectations of even the most optimistic analysts, the English property market is struggling to regain its momentum in 2010, after the stamp duty threshold was once again reduced to £125,000.
Analysts had expected a sluggish start to 2010 because of the threshold being returned to its previous level, thus, the drop in mortgage approvals, sales and even prices are all according to this prediction.
What wasn't predicted was the fact that supply would start to increase at the same time. According to the Royal Institutue of Chartered Surveyors homes coming on to the market increased faster than new buyer registrations in both January and February. It is as yet unclear whether this is simply because of the lull in demand or whether supply increased faster as well.
Either way, the effect the raised stamp duty threshold had on the market, and the subsequent effect on the market when it was lowered again, has prompted action from the Chancellor.
In his 2010 budget, Allistair Darling has raised the stamp duty threshold to £250,000 for first time buyers only. A move offset by an increase in the amount paid for homes over £1 million.
This is an attempt by the government to balance the UK housing market, and make its growth cycles more sustainable; to remove the boom and bust cycle. Few people will be able to argue against the move (apart from those buying homes over £1 million), because while it was nice to see a market revival in 2009, we all knew deep down that the correction hadn't corrected anything, because first time buyers still couldn't afford to buy. Time will tell if this will be enough to change things.
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