LONDON (Reuters) – An unexpected extension of tax breaks for property purchases in Finance Minister Rishi Sunak’s budget last month has rekindled a dying home boom, a study on Thursday showed.
The Royal Institute of Chartered Surveyors said its monthly home price figure, based on survey reports across the country, rose to +59 in March from +52 in February.
Other UK housing market indicators suggest that housing market activity is weakening before the scheduled end of March for a temporary home purchase tax cut, known as stamp duty.
But Sunak extended tax breaks in his budget last month and announced a new mortgage guarantee scheme for new buyers who can’t afford large deposits.
“The results of the latest RICS survey show that the Chancellor’s decision to extend the tax break and then shorten it had an immediate impact on the housing market, and all key activity indicators recovered in March,” said Simon Rubinson. Chief Economist at RICS.
He added that the growing imbalance between supply and demand has also increased pressure on house prices: 60% of respondents expect prices to rise over the next 12 months.
RICS also said there are signs that demand from tenants in the rental market is picking up steam, and surveyors expect rents to rise next year across the country, with the exception of London.
Sunak introduced a stamp duty cut last year as part of emergency measures to help the economy cope with the shock caused by the coronavirus pandemic. Demand for larger homes following the isolation experience has also sparked a surge in activity in the UK housing market since last spring.
Reporting by Andy Bruce, Editing by David Millikan