U.K. Home Asking Prices Jump on Tax Break to Fight Virus Slump
Cranes stand on construction sites in the skyline of central Manchester, U.K. (Photographer: Anthony Devlin/Bloomberg)

U.K. Home Asking Prices Jump on Tax Break to Fight Virus Slump

Home sellers across Britain are optimistic again after the government temporarily cut a tax on property, according to the website Rightmove.

Advertised prices climbed 3.7% from a year earlier in July, the most in more than three years, Rightmove said on Monday. Values were 2.4% higher than when the lockdown started in March. Stamp duty, a levy on home sales, was suspended on July 9 for about 90% of transactions, saving most buyers thousands of pounds.

U.K. Home Asking Prices Jump on Tax Break to Fight Virus Slump

Chancellor Rishi Sunak’s announcement served to “amplify the buyer surge,” said Rightmove. Website traffic jumped 35% from a year earlier in the five days after the levy was lifted. The market had already started to perk up after lockdown restrictions were gradually eased in May, allowing in-person viewings.

“We haven’t seen a market this competitive in years, and we expect it to get busier still as the stamp-duty slash starts to take effect,” said Martin Walshe, a director at Cheffins real estate agents in Cambridge, England. “There has been a misconception among sellers that the market is quiet and depressed when in fact it really is completely the reverse.”

U.K. Home Asking Prices Jump on Tax Break to Fight Virus Slump

Activity at the top end of the market led the gains, while a scarcity of low-deposit mortgages is hurting first-time buyers. More loans for up to 90% of a property’s value are starting to come to the market, Rightmove said.

Longer-term prospects for housing and the economy in general are still clouded by the pandemic as well as the expiration of the transition period for leaving the European Union at the end of the year, which will raise trade barriers with Britain’s biggest partners.

Two-thirds of companies expect to reduce capital spending over the next three years, according to a separate survey of chief financial officers by Deloitte. Half of CFOs don’t expect demand to recover for at least another year.

©2020 Bloomberg L.P.

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