[sgelite]

The Government's attempt to kick-start the housing market by raising the stamp duty threshold to £175,000 has been a failure, experts have said.

Figures from the Department for Communities and Local Government published yesterday, show house prices are plunging at a record rate, down 5.1 per cent over the last year.

An average home in England is worth nearly £15,000 less than in January.
Estate agents in the worst-hit parts of the country, such as London, are selling just one home every two weeks.


Slump: The average property in the UK now costs £208,583, nearly £12,000 less than a year ago

One member of the Royal Institution of Chartered Surveyors warned of 'no signs of recovery, not even a small flicker of light at the end of the tunnel.'

It came at the same time as separate figures from the Council of Mortgage Lenders, also published yesterday, reveal lenders are now handing out the smallest number of mortgages since records began.

In September, just 34,900 people got a loan to buy a home, down nearly 60 per cent in a year and further proof that mortgage lending has fallen off a cliff.

This is because banks and building societies are only prepared to lend to people with large deposits, typically at least 25 per cent.

The catalogue of bad news from the property market yesterday highlights the inadequacy of Labour's attempts to help.

In September, it raised the level at which stamp duty must be paid from £125,000 to £175,000 but the situation has got worse, not better, since then.

Just over half of homebuyers managed to avoid paying the tax in September, compared to only 22 per cent in the same month last year.

But, while this is hurting the Government's coffers, it has done nothing to stop the rot in the housing market.


House building figures are down on this time last year

Gillian Charlesworth, director of external affairs at RICS, said: 'It is pretty obvious that the stamp duty move has not had any impact.'

She described the £50,000 increase in the threshold, which only lasts for a year, as 'a minimal measure to stop a rumour'.

The move was announced at the beginning of September after persistent speculation that the Government was planning to do something about stamp duty.

The hike was meant to help first-time buyers, but they remain an endangered species, according to the Council of Mortgage Lenders.

Just 13,400 young people managed to climb onto the property ladder in September, the lowest number since records began.

The few that did manage to buy their first home are having to put down the biggest deposit for nearly 30 years, equal to 16 per cent of the property's value.

With an average price paid by a first-time buyer of £150,000, this is equal to about £24,000, more than most people earn in a year.

As a result, it is only the well-paid or the lucky whose parents are prepared to give or loan them a deposit who can afford to buy.

Overall, Michael Coogan, the CML's director general, warned the number of people buying homes has reached 'exceptionally low levels.'

In a call for action, he said: 'The Government should consider what other measures can be brought forward to enable the market to transact more easily.'

Yesterday a DCLG spokesman insisted: 'We are constantly looking at what more we can to do to ensure stability and fairness into the market, and working to ensure building societies and banks pass on recent cuts in interest rates.


Source: Daily Mail UK., November 11, 2008