The stamp duty holiday’s role in rocketing house prices over the past year has been overstated, the Resolution Foundation has claimed.
The average value of a UK home increased by 13.2 per cent between June 2020 and June 2021 but the think tank believes the boom has more to do with other factors than the ongoing stamp duty holiday.
The Foundation’s quarterly Housing Outlook concluded higher savings, changes in housing preferences, and falls in mortgage rates would have likely led to significant price rises even without a stamp duty holiday.
The think tank argued that if transaction tax cuts were pushing price trends then there would be a higher growth in areas where the savings from the policy change were most significant.
Prices grew 13 per cent in the fifth of local authorities where savings as a result of a transaction tax holiday were negligible or non-existent, compared to 7 per cent in the fifth of local authorities where the highest savings were achieved.
Areas where the savings from the holidays have been most significant have been no more likely to see an increase in transactions than those where the gains have been small, the think tank said.
There was similar house price growth across the year in Germany, the United States, Canada and Australia and France, which the Foundation said was evidence of shared factors causing rising prices.
The pandemic has seen people opt for larger, detached homes in locations further away from city centres while low interest rates have also played a part, the report said.
Krishan Shah, researcher at the Resolution Foundation, said: “The problem with the stamp duty holiday isn’t that it caused a house price rise, but that a boom in transactions and prices would almost certainly have taken place without it.
“That begs big questions about value for money, especially when we consider that the policy in England and Northern Ireland alone looks set to cost an estimated £4.4 billion in forgone tax revenues.”