Savings from the stamp duty holiday were offset by soaring house prices Business News

Savings from the stamp duty holiday have been repeatedly offset by the rapid rise in house prices which has been fueled by the tax break, Labor said.

Lucy Powell, the shadow housing secretary, accused the government of worsening the housing affordability crisis by implementing the home purchase tax cut that fueled a spike in house prices during the pandemic.

The party estimates that the stamp duty changes have saved buyers of an average home £ 3,419. Meanwhile, official figures show the average selling price of a property has climbed by £ 21,956 over the past year, pushing homeownership beyond the reach of many.

Nationwide reported this week that prices rose again, rising 13.4% during the year through June – the fastest rise since 2004.

The stamp duty payment threshold has been raised to £ 500,000 which the government says will help restart the housing market after a forced shutdown in the first wave of coronavirus.

This meant a tax savings of up to £ 15,000 for home buyers. The threshold will be lowered to £ 250,000 from Thursday and then return to its pre-pandemic level of £ 125,000 on October 1.

Politics has been cited as a major factor in the rise in house prices, which were also boosted by households who were able to save more money during the pandemic.

Even on a conservative estimate, based on turbo-charged house prices, first-time buyers are paying an additional £ 18,537 for their first home compared to the same time last year.

In some areas outside London the difference is, on average, even higher. First-time buyers in the North East and West Midlands are to find an additional £ 20,000, with those in Yorkshire and the Humber, North West and South West among the hardest hit.

Ms Powell accused ministers of failing in their approach to housing, pointing out that homeownership is on the decline after a decade of Tory government, and that ministers’ lack of focus on core affordability is fueling the crisis housing that many people face.

Ms Powell said: “First-time buyers have been further squeezed out of the housing market by the government’s failed approach, which has boosted an already vibrant housing market that had dampened demand even before the introduction of rights holidays. stamp.

“They gave huge tax relief to the housing sector without addressing the fundamental issues of affordability. As a result, the dream of home ownership is now even more out of reach for first-time home buyers whose price is now out of the market. Ten years of a Conservative government with bad priorities have failed to tackle the housing emergency. “