Gordon Brown’s efforts to kick-start the housing market are unlikely to have much effect, economists agreed.
Although the number of hits on Rightmove, the property website, rose 10% yesterday, economists thought the move to raise the stamp duty threshold to £175,000 would be unlikely to increase the number of house purchases. They pointed to the relatively small cost of the tax relative to prices, the severe tightening in credit conditions and widespread expectations that UK house values have much further to fall.
With house prices falling by more than 1% a month, even first-time buyers benefiting from the changes would find any gains wiped out within weeks.
David Page of Investec, the analyst, said the move was 'unlikely to persuade a potential buyer that now is the right time to buy a house'.
The distribution of housing transactions also suggest the moves will have limited effects. The 43% plunge in the number of transactions in the year to May has occurred across the range of property prices, including homes below £125,000, which are already exempt from stamp duty. Further exemptions from the tax are unlikely to have a big impact.