Property industry reacts as Gov pulls U-turn

CEO of Alliance Fund, Iain Crawford, commented:

“Although today’s U-turn is an attempt to calm the waters, it’s fair to say that the government’s shambolic behaviour is unlikely to distil much confidence in the UK economy.

However, as it stands, the UK public will embrace any shred of stability afforded to them in what are currently very uncertain times and the one silver lining of this latest government backtrack should be a boost to property market confidence.

We’re already seeing a strengthening of the pound with gilt yields also dropping and this easing pressure on the markets should reduce the likelihood of higher interest rates.

This will help settle what has been a turbulent mortgage market in recent weeks, rejuvenating buyer demand levels, which will also help to stabilise house prices and investment into the UK property market.”

Director of Benham and Reeves, Marc von Grundherr, commented:

“An extraordinary turn of events, quite literally, but one that should help strengthen a property market that was starting to wobble under the pressure of increasing mortgage rates and dwindling buyer sentiment.

While maintaining a cut to stamp duty will help stimulate buyer demand within the market, overall market health will be far better maintained by stabilising the mortgage sector and our ability to fund a property purchase in the first place.

We should now see this with pressure easing, making the threat of further mortgage rate increases over the coming months less likely.”

James Forrester, Managing Director of Barrows and Forrester, commented:

“It’s impossible to tell just what direction the economy will head following the latest government spectacle, but today will bring an air of positivity to what was quickly becoming a beleaguered property market.

Stability in the gilt markets will bring positive movement for those looking to borrow. But it’s important to understand that we aren’t going to return to a sub one per cent base rate and homebuyers must be prepared to pay more in mortgage costs when climbing the ladder.

However, the government’s choice to maintain the cut to stamp duty tax signals their intent to keep the property market buoyant and this should help boost buyer confidence in itself.”

Managing Director of HBB Solutions, Chris Hodgkinson, commented:

“A case of too little, too late, where the UK property market is concerned as the damage has already been done to homebuyer sentiment, as well as their ability to borrow in order to fund their purchase.

Even if we do now see mortgage rates level out, many will be far too worried to proceed with a purchase in fear of another government U-turn further down the road, leaving them unable to afford the cost of their mortgage.

As a result, we can expect market activity to remain muted over the coming months, causing house prices to drop as a result.”