Bust will follow property boom, fear agents
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