Tax break extension revives UK housing market boom: RICS

[LONDON] The unexpected extension of a tax break for property purchases in finance minister Rishi Sunak's budget last month has revived a fading boom in housing market activity, a survey showed on Thursday.

The Royal Institution of Chartered Surveyors said its monthly gauge of house prices - based on the reports of surveyors across the country - rose in March to +59 from +52 in February.

Other measures of Britain's housing market have suggested that activity in the housing market was fading before the planned expiry of a temporary cut to property purchase tax, known as stamp duty, at the end of March.

But Mr Sunak extended the tax break in his budget last month and announced a new mortgage guarantee scheme for first-time buyers who cannot afford large deposits.

"The results from the latest RICS survey show that the decision of the Chancellor to extend the stamp duty break and then taper its expiry has had an immediate impact on the housing market with all the key activity indicators rebounding in March," said Simon Rubinsohn, RICS chief economist.

He added that a worsening imbalance between supply and demand had also raised the pressure on house prices, with a net 60 per cent of survey respondents expecting prices to rise over the next 12 months.

RICS also said there were signs that tenant demand in the rental market was building a "head of steam" and surveyors expected rents to rise over the coming year across the country, apart from in London.

Mr Sunak introduced the stamp duty tax cut last year as part of emergency measures to help the economy cope with the shock of the coronavirus pandemic.

Demand for bigger homes after the experience of lockdown has also driven a surge in activity in Britain's housing market since last spring.

REUTERS