Government action to limit the impact of rising energy prices has helped push the housing market back from the precipice, a major real estate association has said AM City this morning. But the National Association of Property Buyers (NAPB) stresses that further action is urgently needed to ensure we don’t see a serious decline in real estate prices in the new year.
“The government’s swift action to limit the impact of rising energy prices has, for now at least, averted the precipice the property market was heading towards,” the spokesman said this morning. Jonathan Rolande.
“There are still a lot of problems with our economy and our housing supply, not to mention the huge inequalities faced by those who don’t own property or don’t have the financial support of someone who does.”
With a rapid price drop looking unlikely at the moment, now is the time for the government to keep the market stable and put in place measures that will bring the market back to something like before the recent boom.
Presenting the measures that the NAPB would like to see put in place, Rolande added: “We must start by reforming the stamp duty”.
He explained that “a positive step would be to see zero rates for retirees move down in terms of number of bedrooms, reduced rates for those involved in buy-to-let transactions and zero rates for first-time buyers in less affluent areas”.
“We should also consider selling disused municipal land for housing provided it is built within a year. Where land is not purchased by developers, councils should be encouraged to organize build and lease schemes
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“Finally, I would like ministers to offer tax relief to landlords who commit to long-term renting with reasonable and fixed rent increases. Longer-term renting is a greater risk for the landlord, so reward- le for providing more security to tenants,” he said.
Rolande’s comments after experts said reports that the housing market could crash as interest rates rise and the economy slips into recession may prove to be overblown.
House prices have skyrocketed due to near-zero interest rates and many assumed they would come down to earth when mortgage costs finally started to rise.
Property is now less affordable than it ever was, with the average UK property costing 9.1 times the average wage, down from just 3.55 times 25 years ago in 1997.
The Bank of England has repeatedly raised interest rates to curb inflation and this is ddrive up mortgage costs.
The two-year average fixed rate nearly doubled to 4.24% from 2.24% two years ago, according to the latest figures from Moneyfacts.
However, the energy price freeze decided last week by Prime Minister Liz Truss could reduce the inflation rate by 4 to 5%.
This would reduce pressure on the BoE, although it is still ready to raise interest rates at its next meeting on September 22.
Wages are rising faster than expected while unemployment has fallen to its lowest level since 1974.
It now stands at just 3.6% in July, according to figures released yesterday.
This will reduce the number of forced sale of goods due to unemployment, while figures from Halifax show prices rose another 0.4% in August and 11.5% over the year.
North London estate agent Jeremy Leaf said the shortage of inventory was also supporting prices. “We don’t expect a significant correction yet, although the market is more price sensitive.”
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