Bust will fol­low prop­erty boom, fear agents

The Daily Telegraph - Business - - Coronaviru­s: Focus On The Economy - Is­abelle Fraser By

THE hous­ing mar­ket boom could be fol­lowed by a bust if prices slump when the Trea­sury’s Covid sup­port schemes are wound down, es­tate agents have warned.

In­quiries by new buy­ers, in­struc- tions from sellers and agreed prop­erty deals all surged in July after Rishi Sunak, the Chan­cel­lor, slashed stamp duty, ac­cord­ing to a poll by the Royal In­sti­tu­tion of Char­tered Sur­vey­ors (Rics).

But although agents ex­pect prices to hold up for the next few months, most fear a slump in a year’s time when both the stamp duty hol­i­day and tax­payer­funded fur­lough scheme will have come to an end.

Si­mon Ru­bin­sohn, of Rics, said: “There re­mains rather more cau­tion about the medium term out­look with the macro en­vi­ron­ment, job losses and the end­ing or ta­per­ing of gov­ern­ment sup­port mea­sures for the sec­tor ex­pected to take their toll.

“Sig­nif­i­cantly, some con­trib­u­tors are now even ref­er­enc­ing the pos­si­bil­ity of a boom fol­lowed by a bust.”

Sev­eral Rics mem­bers said that the stamp duty hol­i­day has driven sales even higher fol­low­ing a wave of pentup de­mand cre­ated by lock­down.

Shaun Bran­nen, an es­tate agent in Ty­ne­side, said July had been the best month for sales in 29 years of busi­ness.

Agents sur­veyed were op­ti­mistic about house price growth for the first time since March, although firms in Lon­don did not re­port a rise in prices.

A sep­a­rate re­port by the Res­o­lu­tion Foun­da­tion think tank found that even when house prices do slump, first-time buy­ers will not ben­e­fit be­cause the re­ces­sion will also trig­ger falls in in­come which makes it harder to get on the lad­der.

In the Nineties, an av­er­age cou­ple sav­ing 5pc of their in­come could put to­gether a de­posit in four years. It now takes 21 years.

The Res­o­lu­tion Foun­da­tion said that even if the Of­fice for Bud­get Re­spon­si­bil­ity’s worst case sce­nario for house prices played out – a 22pc fall by the third quar­ter of 2021 – it would lead to just a year’s less sav­ing for an av­er­age de­posit.

This timescale would be length­ened fur­ther if mort­gage lenders fol­low the fi­nan­cial cri­sis play­book by mak­ing it harder to bor­row, it added.

Chan­cel­lor Rishi Sunak’s stamp duty hol­i­day has driven sales even higher fol­low­ing the eas­ing of lock­down

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