Chancellors delivers mortgage guarantee gift, but misfires with stamp duty holiday spend
UK head of Infrastructure, Building and Construction at KPMG, Jan Crosby comments on the Chancellor’s announcements today
Jan Crosby comments on the Chancellor’s announcements today
Commenting on the Chancellor’s announcements today, Jan Crosby, UK head of Infrastructure, Building and Construction at KPMG, said:
“As the Chancellor recognised, the housing market is still going strong and with the 8% rise in house price inflation recorded last year, it’s evident that the supply/demand imbalance continues, as does the impact of past inflationary policy. So arguably the estimated £1.6bn cost of the stamp duty holiday is not needed, particularly given it seems to have passed through to house pricing to date. However, no doubt it will be welcomed by the sector.
“The announcement about 95% mortgages was a necessary intervention given how much house prices have risen and this isn’t an issue that’s exclusive to the UK. Clearly it is a tricky balance as house prices and deposit requirements are increasing and remain unaffordable for many; interest rates are currently very low, but future rises could impact heavily on affordability. The Government’s mortgage guarantee scheme suggests that house price stability or growth will be a continued focus for future policy – and may need to continue after the proposed December 2022 date.
“It’s great to finally have a sovereign wealth fund, with the UK Infrastructure Bank, as currently, international pension funds support much of the country’s real estate and infrastructure sector. So now, perhaps the UK can have a route to drive investment from its own pension schemes. The key will be getting the appropriate definition of infrastructure, including key worker housing - which is still in too short supply, energy efficiency retrofit for existing buildings and new green industry. Freeports could be a strong route to these, and whilst they are complex, they have tax advantages and are potentially game-changing for local economies.”
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