Stamp Duty leak makes RICS survey headline redundant

Posted on 12 August 2008 by Ray Boulger

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The Royal Institute of Chartered Surveyors' (RICS) monthly survey of the housing market out today is headlined "Tentative signs that housing activity may be nearing a floor." This would have been a very sensible headline, based on the content of the report, if the Government hadn't chosen to leak to The Sun last Tuesday that it was considering suspending stamp duty for a limited period.

However, in the light of that leak, which according to the weekend press came from No 10 as a way of testing the reaction to such a proposal, The Chancellor and the Housing Minister have been put in an impossible position of not wanting to lie by denying the leak is true, but also not being able to confirm it. The inevitable consequence, which No 10 don't seem to have been bright enough to work out, is that the slight improvement in housing transactions RICS has identified will now rapidly turn into a further sharp reduction in activity.

Potential new buyers will wait until the Government clarifies the position and some existing chains will fall apart. It of course only needs one buyer in a chain pull out for several other transactions to unwind and weeks of work by estate agents, mortgage brokers and lenders to come to nothing, to say nothing of the stress the buyers and sellers will suffer.

In view of this RICS' headline may turn out to be the most unfortunate survey headline of the year, apart from those forecasting a 35% fall in property prices, which will just be plain wrong. The RICS headline must have been written before the stamp duty leak last Tuesday but RICS really should have amended it. However, it provides even more egg on face for the Government after their schoolboy error of leaking such sensitive information because the green shoots the survey identified will now be snuffed out.

Next month's headline from the RICS survey will probably be along the lines of "Government causes housing transactions to fall off a cliff."

 

Category: House and home, Property market

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