Sweeping stamp duty reforms will give the flagging housing market a much-needed boost, sparking a surge in sales over the next year, according to a leading survey of property agents.
In his Autumn Statement, George Osborne reduced the burden of stamp duty for buyers in the mainstream housing market, switching the old slab system to a new graduated one, and ridding the market of huge jumps in transaction tax.
A snap poll of RICS members showed that property surveyors and agents in England and Wales believe there will be an increase of up to 5pc in sales over the next 12 months, as people put their homes back on the market hopeful of a higher price around the old tax thresholds and an easier sale.
“The stamp duty reform could reverse the softer trend in buyer enquiries that has been visible in recent months but a critical issue in terms of how it plays out with prices is whether it also encourages more vendors to consider putting their properties back onto the market,” said Simon Rubinsohn, chief economist at RICS.
“The expectation from members that transactions could increase by up to 5pc over the next year on the back of this measure suggests that there is a belief that supply will indeed respond to the tax change.
“This is all the more important given that the latest RICS data suggests that the average level of inventory on surveyors’ books is close to a historic low.”
These findings were mirrored by the monthly RICS sentiment survey, which was conducted the day before the Autumn Statement, and found that 26pc more surveyors and estate agents in November than October believe the number of transactions have risen along with a slight uptick in house prices.
Agents in London expect a minimal lift in sales over the next three months, with the sentiment pendulum swinging from -1pc in October to 7pc in November. The biggest shift in mood came from members in the North and East Anglia who expect sales to improve dramatically in early 2015 driven by growing confidence in economic recovery in the regions.
However, the industry remains pessimistic on house prices.
After a year of record house price growth, a crack-down on reckless lending stopped the housing market in its tracks with RICS recording the slowest house price growth for six months in November.
Surveyor sentiment was particularly muted in London where house prices dwarf those of the rest of the UK.
Stretched affordability, slow wage growth and political uncertainty in the build-up to the general election, has dampened spirits in the capital.
Stamp duty, which is punitive above the £937,000 price point, will only serve to depress estate agents in London further, explained Russell Quirk, managing director of eMoov.
“I suspect it’s only London buyers that are waiting for the outcome of the general election, particularly those with £2m or more to spend. The threat of a Labour-led mansion tax over and above George Osborne’s own version as unveiled in the Autumn Statement (stamp duty at the top end), is the biggest kick in the face for the London market since the supertax of the 1970s,” he said.