Will the budget have an impact on property prices? by Andrew Kay
The Chancellor, Phillip Hammond, has delivered his second budget and used it to urge the UK to "seize the opportunities" from Brexit while tackling deep-seated economic challenges "head on".
As many expected, there was a larger focus on housing than in previous budgets, announcements included local authorities to be allowed to levy 100% council tax surcharge on empty homes, £44bn injected over the next 5 years to support housing market, promises of 300k new homes built per year and most notably the abolishing of Stamp Duty for first-time buyer purchases up to £300,000. For purchases up to £500k the first £300k is also exempt for first time buyers.
I know that the question you are all eager for me to answer is; what do I think of these changes?
On the one hand, supply will be slightly affected by introducing more property into the market although it remains to be seen whether the government targets will be met and change will be slow. If demand for property remains constant, there will be a downward pressure on house prices all other things being equal. However, by making the purchase process slightly more accessible to first time buyers, the demand for property should increase since property for this group will become more affordable. Therefore, the net effect on property prices will be negligible. The general performance of the economy and the speedy conclusion to the Brexit negotiations which would reduce uncertainty in the property market will have a much greater effect upon property prices. The property market always thrives when confidence is high!