Stamp duty holiday boosts house prices and property-related shares
The decision by chancellor Rishi Sunak to temporarily waive stamp duty on the purchase of homes up to the value of £500,000 in England and Northern Ireland until the end of March 2021 has reignited the housing market after months of hibernation caused by
Property portal Rightmove (RMV) itself has marginally beaten the index, up 1.7% in line with estate agency Countrywide (CWD), while Foxtons (FOXT) has led the pack up 5.3% followed by Purplebricks (PURP:AIM) with a 3% gain.
The latest Rightmove house price index, based on 95% of newly marketed property in England, Scotland and Wales, shows the largest monthly increase in three and a half years in July, with the average selling price rising 3.7% year on year to a record £320,265.
This marks an increase of 2.4% or £7,640 over the average price in March, before the housing market was put on hold. Rightmove was unable to calculate the index for the whole of the UK in May and June due to lack of available data.
Rightmove also reported that so far this month buyer enquiries are up 75% on last July and the number of monthly sales agreed in England is already up 15% on last year.
After months of speculation regarding the impact of the crisis on the housing market, the latest figures should help lift consumer confidence which has taken a beating in the last four months.
Miles Shipside, Rightmove director, says: ‘The unexpected mini boom continues to gather momentum. Prices are gently rising not falling, and this will be reflected in other house price reports.’
The stamp duty move is designed to help young people, whose finances and jobs have been most severely affected by the crisis, get on the property ladder.
It is also designed to help the housebuilding sector, which supports nearly 750,000 jobs, while millions of people need affordable housing to find work. Following the cut, it is estimated that 90% of people buying a home between now and the end of the year will pay no stamp duty at all.