The government’s stamp duty cut to reboot Britain’s virus-stricken property market has benefited London most and had little impact elsewhere so far, according to Zoopla.
In a reflection of the disproportionate benefit for wealthier buyers, the property website said that agreed house sales in the capital jumped by 27% in the first two weeks of the stamp duty holiday.
The tax, which is paid by homebuyers, was temporarily removed on properties up to £500,000 in England and Northern Ireland by Rishi Sunak as the centrepiece of his summer financial statement this month.
Designed to boost housing transactions and demand for goods and services related to moving home – such as estate agents, solicitors, removals and the building trade – the tax holiday is set to last until 31 March 2021, at a cost to the exchequer of £3.8bn.
In its monthly assessment of house prices and property sales, Zoopla said the change had less of an impact on regional housing markets than in London. “This boost to transaction volumes has not been replicated in other regions, where average property prices are lower and less responsive to stamp duty amends,” the property website said.
“While stamp duty relief will support demand in higher value markets [on property priced up to £500,00] across southern England, it is unlikely to sustain demand indefinitely into 2021,” it added.
Figures published this month by the property website Rightmove indicated that Conservative-voting areas in the outer orbit of London would probably benefit most from the stamp duty cut.
Economists said at the time of the summer statement that cutting stamp duty could push up house prices, eroding the gains from the cut for buyers. According to the Resolution Foundation, an average homebuyer in the north-east of England will see no benefit from the change, while a typical London buyer will save more than £14,000.
The thinktank said the average first-time buyer already paid no stamp duty – because of an existing stamp duty relief for first-time buyers – except in London, and so those new to the property ladder would not benefit either.
The chancellor has said he used the cut to revitalise the housing market at a time when property prices are falling for the first time in eight years owing to the pandemic.
Answering questions this month from MPs on the Commons Treasury committee, he said: “We thought that people buying, moving, selling and then renovating would be good for jobs and economic activity. That is why we acted in the way that we did.”
Zoopla said that since the start of 2020, sales agreed were still 20% below the same period in 2019 – the equivalent of 124,000 lost sales worth £27bn in total since March.
By the end of the year, Zoopla said the lag was expected to have made a marginal recovery, with total transaction volumes for the year as a whole likely to come in about 15% below 2019.