Ken DavyAug 12 2020

Chancellor’s housing market bet could pay off

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As chancellor Rishi Sunak heads off for his summer holidays, he probably feels he can look back on a job well done.

Mind you, when all you are doing is giving away money, I guess it is not too difficult to be popular.

The best estimate of the cost to the government of Covid-19 currently stands at well in excess of an eye-watering £300bn. The hard part will be in the coming months and years, when the nation must work towards balancing the books.

There is one particular area of the government’s boost to the economy that everyone should welcome with open arms – especially all of us in the financial services sector.

Kickstarting the housing market is the most effective and fastest way to get the economy moving

That is the chancellor’s bold attempt to kickstart the housing market, which I believe has all the hallmarks of a masterstroke of economic strategy.

He has raised the starting point for stamp duty to £500,000, which must have taken a bit of courage, given how ready the media are to criticise inequalities within the housing market.

The reality, however, is that kickstarting the housing market is the most effective and fastest way to get the economy moving.

It is not just that housing sales are good for financial advisers, estate agents, removal companies and solicitors; it is that an active housing market has a positive impact on virtually every aspect of the economy.

When someone moves to a new home, they invariably want to make a whole host of changes, giving a boost to the textiles, white goods and trade sectors.

All in all, it is not difficult to see that a thriving housing market creates a dynamic engine that can quickly start to drive the economy forward.

This is where I think the chancellor has pulled off his masterstroke.

Firstly, the changes to stamp duty are immediate and, secondly, the benefits themselves are short lived, ending as they do next March. This means if you want to take advantage of the opportunity to save many thousands of pounds, you have to act quickly.

The early signs are that Mr Sunak’s boost to the economy is working.

The number of houses being listed for sale has dramatically increased, along with early indications that buyers are returning.

Covid-19 has given financial advisers in the mortgage market some difficult months; however my guess is that the chancellor has now given them an early Christmas present.

Ken Davy is chairman of SimplyBiz Group