Alistair Darling's stamp duty giveaway last week may have won Labour a handful more votes from grateful first-time buyers, but the Chancellor's announcement was motivated by economic as well as political concerns. Though Mr Darling claimed last week that the stamp duty reduction offered in 2009 had stabilised the housing market, it is now clear the sector has slipped back into reverse since that concession ran out at the end of the year.
Yesterday's borrowing figures from the Bank of England underline the point. February's total was down on January and the figures for both months were around a fifth down on November and December. This is one reason why all of the main house price indices have begun to flag up new falls.
The latest stamp duty offer, therefore, is as much about providing fresh impetus to the housing market as it is about securing additional support for Labour. Setbacks in the sector will damage confidence and could even presage the dreaded double dip in the economy as a whole.
Moreover, since first-time buyers are more crucial to the housing market than those buying million-pound plus properties, making the latter cover the cost of a break for the former is a smart move.Reuse content