MNI BRIEF: Stalling UK House Market Poses Policy Challenge

Enquiries across the UK from new home buyers fell to a multi-month low in January as a national lockdown and the looming unfreezing of Stamp Duty weighed on activity, the Royal Institute of Chartered Surveyors (RICS) said Thursday, with the balance of agents reporting fresh demand at -38, down from +12 in December.

This, along with a first dip in house prices reported by the main mortgage banks, suggests a pull-back in demand during a period in which it is now no longer possible for house buyers to complete transactions before the property tax is reintroduced.

If further evidence suggests a housing slowdown is largely due to the reintroduction of the Stamp Duty, Chancellor Rishi Sunak will face a question ahead of his March budget - whether to unfreeze and replenish state coffers, or to extend the freeze, or, alternatively, whether to target a freeze on certain sectors of the market in order to generate turnover as the economy reopens post lockdown.