"All they need to get the borrowers moving is a functioning housing market."
This fall in transaction volumes represents a reduction of 38% on 2019 and is set to result in £4.4bn in lost stamp duty accompanied by a loss of at least £1.6bn in VAT.
Based on the assumption that the current lockdown will remain in place through April and May, with a gradual lifting through June, Knight Frank has forecasted that the knock-on impact of the housing market shut down will also result in 350,000 fewer mortgage approvals in England and Wales this year. The figure includes more than 150,000 fewer mortgages to first-time buyers.
As a result, Knight Frank is urging the government to implement a stamp duty holiday and extend Help to Buy to reignite the housing market after Covid-19.
Simon Gammon, managing partner at Knight Frank Finance, said: “It’s become increasingly clear lenders are eager to do business. Two weeks ago many banks retreated to the safety of more conservative lending criteria as they were overwhelmed by calls in the wake of two Bank of England rate cuts and the shut-down of many international call centres. But in recent days we’ve seen the major lenders coming back, raising the loan-to-value ratios they are willing to lend at, eager to gain market share. All they need to get the borrowers moving is a functioning housing market.”
Tom Bill, head of London residential research at Knight Frank, added: “Moving house has a clear multiplier effect for the economy. Different-sized businesses in all areas of the economy feel these benefits, which is something the government will take into account when drawing up its post-lockdown stimulus plan.”
