Critics have rounded on prime minister Gordon Brown’s housing market rescue package saying it will do little to reverse the worst housing slump in 18 years.
From today the government has scrapped stamp duty for a year on homes worth less than £175,000 as part of a package of measures designed to revitalise the flagging housing market.
The minimum threshold to which the one per cent tax will apply has been raised from £125,000. The move will exempt half of all home transactions from the tax at a cost of £600m to the government and is part of a £1bn package of incentives to help first-time buyers get a foothold on the property ladder and help people who are struggling to make their mortgage repayments.
However, analysts and the housing industry labelled Brown’s attempts as “too little, too late” saying it was merely a sticking plaster measure that would fail to have any real impact on the housing market.
“The stamp duty holiday may provide the domestic housing market with a marginal stimulus but we doubt it will gave a major effect in getting the housing market moving again,” said Philip Shaw, chief economist at Investec.
Ed Stanfield, property economist at Capital Economics added: “The idea that this is a rescue package is overblown. It doesn’t do anything to support buyer confidence or free up the mortgage market. The root of the problem is that the market is overvalued and a true recovery will only take place once prices fall back.”
House prices have fallen just over 10 per cent from their October 2007 peak and Stanfield believes prices must fall by another 20 per cent.
Law firm Dawsons said the stamp duty holiday would do little for Londoners where the average home costs £375,000 and called for a break on all properties.