The biggest winners will be existing homeowners – rather than people struggling to get on the housing ladder – the Office for Budget Responsibility (OBR) warned.
Just 3,500 additional homes would be bought each year because of the headline-grabbing Budget measure, expected to cost about £3.2bn by 2022-23.
And it was open to “abuse”, with couples tempted to put a purchase in the name of whoever was a first-time buyer, the OBR suggested.
The head of the Resolution Foundation think tank suggested it meant the cost to the public purse would be a cool £900,000 for each extra first time buyer.
“It would be much cheaper to literally build them a house each,” said Torsten Bell, its director.
In his Budget “rabbit”, Philip Hammond announced that stamp duty will be scrapped immediately for first-time buyers of homes below £300,000.
In London and other property hotspots, it will be axed on the first £300,000 of a purchase price up to £500,000 – representing a cut of up to £5,000.
The Chancellor said that the move would slash the tax for 95 per cent of first-time buyers and abolish it altogether for 80 per cent of them.
But, asked by The Independent if the increase in house prices sparked by the abolition of stamp duty would be greater than the saving made, the OBR’s chairman Robert Chote replied: “Yes.”
He said first-time buyers would still feel the were benefiting, if they were able to buy a home they otherwise would be denied.
But, he added: “Those houses will be more expensive.”
While some initially cheered the move, personal-finance experts slammed it as a token measure and one that’s unlikely to offer significant relief to savers trying to buy their own home.
“While welcome, abolishing stamp duty is a drop in the ocean given the affordability challenge of getting Generation Rent onto the property ladder,” said Simon Heawood, chief executive and founder of property investment site Bricklane.com.
“The focus on bridging the housing generational gap must lie on the all-important first rung of the ladder – saving up for a deposit. The issue of housing supply and price is important, but looking at measures to support Generation Rent’s ability to get together a deposit is crucial,” he added.
House prices have surged in recent years, barring many from being able to buy, especially as wage growth has stagnated.
The most recently available official data shows that annual house-price growth across the UK stood at 5.4 per cent in September, up from 4.8 per cent in August.
The average UK house price was £226,000 during the month, marking a 0.4 per cent increase on the previous month.
Responding to Mr Hammond’s announcement, the OBR also said that the move would probably have the effect of driving house prices up even more – by around 0.3 per cent, with most of the increase happening in 2018.
Polly Neate, chief executive of housing charity Shelter, also responded critically to the news.
“The stamp duty holiday focused on first-time buyers sounds positive on paper but realistically, this will only help a very small number of people who have already been able to save enough for a deposit,” she said.
“For most young people, home ownership has become a pipe dream and the high cost of rents has made it difficult for them to save.”
Separately on Wednesday, Mr Hammond promised a wide-ranging spending package to boost housebuilding. He set a target of an annual 300,000 homes built by the middle of the next decade.
Higher capital funding, loans and guarantees, plus measures to boost the supply of skills, resources and land, would add up to £44bn, he said.
And the Chancellor adopted another Labour policy, with a threat of what have been dubbed “use-it-or-lose-it” powers to target developers who hoard land but refuse to build.
Big developers have repeatedly been accused of exercising an iron grip on the pace of housebuilding, with no commercial incentive to build faster unless prices are on the rise.
But they have resolutely rejected accusations of land-hoarding, insisting delays are often caused by a cumbersome planning system and failures by local-authority planners.
New cash set aside for housebuilding will include a £630m small-sites fund, £2.7bn to more than double the Housing Infrastructure Fund, £400m for estate regeneration, £8bn of new financial guarantees to support private housebuilding and an additional £34m to develop construction skills, Mr Hammond said.
He defended the Government’s housebuilding record, claiming 1.1 million homes had been built since 2010, of which 350,000 were “affordable”, but also warned that the proportion of young homeowners had plunged from 59 per cent of young people to just 38 per cent over 13 years.
“We need to do better still if we are to see affordability improved,” he said.
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