Watching the Chancellor deliver his Budget, many of us hoped the big news was finally going to be a much-rumoured change in stamp duty. Perhaps a new 2 per cent rate band or even the holy grail of a full overhaul to charge the tax like income tax and end the much-maligned slab effect.
It was not to be but the surprise changes in pension legislation nonetheless cast a shadow over the property market. There are two schools of thought as to what they could mean.
On one hand, the fact that pensions are no longer prescriptive about how and when income has to be taken may mean that many will return to pension saving rather than investing in buy-to-let property. This would certainly make first-time buyers feel more positive.
On the other hand, baby-boomers near retirement will suddenly be able to access oodles of cash, which could see demand for BTL investment properties soar as an alternative or companion to other income-producing investments.
The latter feels more likely; the British obsession with bricks and mortar is well documented.
Unfortunately, this does not help the issue of rising prices and lack of supply, which continues to widen the gap between the generations in terms of homeownership.
There has been a lot of talk about the overheating London market, with many blaming Government schemes that stimulate demand rather than solve the real issue, which is a lack of supply.
Looking at the impact of Help to Buy, it is pretty clear that for the moment this has not been fuelling London house prices. With the average price at around £200,000, it is no surprise that about 80 per cent of the scheme’s take-up has been concentrated outside London.
Help to Buy 1, the equity loan, has given house-builders more confidence and it was no surprise to see it extended. The more controversial second part of the scheme has had beneficial effects on the availability of 95 per cent deals, with three times as many available either via the scheme or off the lenders’ own backs.
The problem is that although there is no evidence yet, schemes that boost demand rather than supply have the potential to blow up a housing bubble.
The blame for this boom has been put on various factors: too many foreign investors, cash buyers, BTL investors and low interest rates. And now the Bank of England is wading in with worries that mortgage lending is too lax and borrowers are borrowing too high a multiple of income.
I wonder sometimes if the Bank has heard about MMR, where stress tests at the 6.99 per cent level looks to be commonplace.
All this ignores the simple issue that there is not enough supply, plus high stamp duty rates are putting off potential vendors.
London has always had a unique property market, with demand from cash-rich UK and overseas buyers unwavering.
As the capital continues to prosper, this demand is unlikely to abate any time soon.
So regardless of Government schemes, the fact is that increasing housing supply – that is ultimately affordable – is crucial. Unfortunately, in recent years successive governments seem to have struggled to provide sufficient plans for doing so.