Long-term stimulus needed to support a sustainable housing market, says Robert Burdett

Long-term stimulus is needed to bring the housing market fully to life, and avoid short-term peaks and troughs, says Robert Burdett, MD at Essex-based property management and sales firm James Leigh Property Management.

The Stamp Duty holiday has been a lifeline for the housing market, stimulating house sales across the UK thanks to the savings that could be made on this sales tax. However, with sales slowing in March as it neared its anticipated end and an upsurge in sales and enquiries when the extension was announced by Chancellor Rishi Sunak, it is clear that whilst welcome, short term measures such as this do not encourage long term stability.

Robert Burdett, MD at James Leigh Property Management, said:

“The Stamp Duty holiday is an unprecedented and very welcome shot in the arm for the housing market when it was desperately needed. But with lockdown now easing and Covid-19 firmly in retreat, now is the perfect opportunity to be looking at how the housing market can be built on firmer foundations than it has previously enjoyed.

“The introduction of the 95% mortgage is a welcome move for first-time buyers, but more needs to be done to ensure the whole market can enjoy a stable future.”

Lending criteria currently prevents some buyers from accessing mortgage finance because on paper their income is not high enough to meet the lender’s criteria for income, even though they may be paying more in rent than they would be for a mortgage. Add to that the changing needs of people who have found that they can work from home and enthusiasm for living away from the cities, and the direction that the housing market will travel seems unclear.

Data released by Estate Agency firm Keller Williams show the changing pattern of where people want to live, and the outdoors features strongly in the research.

Robert Burdett said:

“The research published by Keller Williams shows that the Covid pandemic has changed the way people are thinking about the homes they want to buy. Working from home in particular means that people are not as reliant on access to the cities, and so can buy where they want to live rather than where they need to access work.”

Support for the housing market for the long term could include a continuation of the Help to Buy scheme and reform to the mortgage industry so that affordability reflects current household expenditure. (Rents could be considered as a benchmark for people moving from rented to mortgaged property for example.) In addition, reducing cost burdens like Stamp Duty in the long term could actually raise more revenue for the Exchequer if it ensures a more level market.

Robert Burdett concluded:

“In the end, the housing market needs measures in place that will flatten the bumps in the road and create a sustainable future market. If the Stamp Duty Holiday has taught us anything, it’s that short terms measures whilst useful at the time, do nothing for longer-term stability and growth.”

Kindly shared by James Leigh Property Management

Main photo courtesy of Pixabay