British housing market strengthened by budget

Estate agents in the United Kingdom say last week's budget measures will boost house prices across the country this year.

Chancellor of the Exchequer Rishi Sunak last week confirmed an extension to the house buyers' stamp duty tax holiday and for the furlough program to support jobs.

In its forecast for annual house price growth this year, agent Knight Frank suggested the measures have "changed the landscape for the housing market".

It raised its January estimate for house price growth from 0 to 5 percent, and a new forecast published this week by agent Savills, suggested average UK house prices would rise by 4 percent in 2021, up from zero growth in its previous outlook.

Lucian Cook, residential research director at estate agent Savills, was quoted by the Financial Times as saying that, by extending both the stamp duty holiday and the furlough program, the chancellor has "significantly reduced the downside risks in the mid-year", adding that "a recovering economy should support price growth towards the year end".

The government introduced the stamp duty holiday in July last year to help buyers who might have taken a financial hit because of the COVID-19 pandemic, and to boost a property market hit by the first lockdown in March.

The tax relief was made available on the first 500,000 pounds ($700,000) of residential purchases in England and Northern Ireland, and agents say it helped the housing market to bounce back after its restricted reopening in May.

Mortgage lender Nationwide found prices climbed by 7.3 percent in 2020, the highest annual increase in six years.

Buyers and agents had become concerned that if the stamp duty relief were to end on March 31, as originally planned, the incentive to buy would be gone and there would be a risk of a house price crash.

Savills said that as the government seeks to support business, interest rates are likely to remain lower for longer than expected before the pandemic, and this would also aid housing market growth.

The chancellor also confirmed in the budget that a government guarantee would mean first-time buyers should get a wider choice of mortgages that require a deposit of just 5 percent of the loan.

The UK's largest mortgage lender, The Halifax, which is part of Lloyds Banking Group, said last week that the extension of the stamp duty holiday has "removed uncertainty" for those completing house purchases.

However, a BBC News report noted that some critics have said the budget policies could push up house prices, making buying a home a less likely prospect for young people in the future.