LONDON – Britain’s red-hot housing market cooled a little last month in July as the partial removal of a temporary cut to property purchase taxes caused a slight drop in demand from new buyers, a survey showed on Thursday.
The Royal Institution of Chartered Surveyors (RICS) said its monthly gauge of house prices eased in July to +79 from +82 in June, which had been highest level since the late 1980s. A Reuters poll of economists had pointed to a reading of +76.
Finance minister Rishi Sunak cut stamp duty, a tax on house purchases, in July 2020. But from last month it started to return to its pre-pandemic level.
The tax cut aimed to reverse a slump in property sales at the start of the pandemic, and helped fuel a surge in property prices and some new construction. Many households were already seeking more spacious housing suited to working from home.
“Although the tapering in stamp duty is beginning to have some impact on RICS activity indicators, the overall tone to the market remains firm with the metrics capturing price expectations showing few signs of wavering,” said Simon Rubinsohn, RICS chief economist.
While buyer enquiries weakened for the first time after four months of increases, Rubinsohn said buyers continued to put a premium on spacious properties – explaining why house price expectations remained elevated.
Mortgage lender Halifax said last week that this had helped to keep momentum in the market, after it reported an unexpected month-on-month increase in house prices for July.