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The government has been urged to take action to support the housing market, including a stamp duty holiday, as UK house prices are forecast to drop due to coronavirus.

The Royal Institution of Chartered Surveyors (Rics) has called for a stamp duty holiday as a “short term measure”. It said it could encourage potential buyers to act after the immediate public house crisis has passed.

The call came as a survey found 74 per cent of respondents expected London house prices to drop within three months. UK house prices are also expected to fall.

Last month 39 per cent of chartered surveyors reported a fall in buyer demand in the capital. 60 per cent more respondents reporting a fall in agreed sales than in February.

New homes coming onto the market dropped sharply in March, with a net balance of -63 per cent of London respondents reporting a fall.

Meanwhile, six per cent of landlords have reported a rise in new instructions during March. Tenant demand rose 19 per cent.

Respondents said the virus will drive rents down in London over the three months.

Hew Edgar, Rics head of government relations said: “As we start to emerge from this crisis… it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off.

“For those who can afford to move they may lack confidence in the market, adding to the slow down.”

A stamp duty holiday could “reactivate the housing market quickly as a short term measure,” he said.

Simon Rubinsohn, Rics chief economist, added: “The feedback from the survey does imply that further government interventions both in the wider economy and more specifically in the housing market may be necessary to aid this process supporting businesses and people back into work.”

By Jessica Clark

Source: City AM

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