The new government is betting on tax cuts to stimulate economic growth, but there are bigger forces that will weigh on housing demand. Liz Truss and her team are taking an economic gamble that it hopes will pay off at the next general election, which will be no later than January 2025.

Their vision assumes tax cuts will produce economic growth and Chancellor Kwasi Kwarteng announced a package of measures that included a stamp duty cut. The level at which stamp duty becomes payable will double to £250,000 from £125,000, which will mean a saving of £2,500 for all buyers.

First-time buyers will not pay any stamp duty on the first £425,000 (up from £300,000) and the value of any property on which they can claim this relief will rise to £625,000 from £500,000. Other measures affecting the residential property sector include the liberalisation of planning rules and the release of land to speed up development in “investment zones”.

All of this will undoubtedly produce a short-term increase in activity in the housing market. Demand for one-bedroom flats and two-bedroom houses may pick up more notably due to the greater incentives on offer to first-time buyers.

In simple terms, what the Chancellor is giving away will be more than taken back by the Bank of England, which raised the bank rate to 2.25% from 1.75% on Thursday.

Many buyers will find the impact of rising mortgage rates soon eclipses the benefit of the stamp duty cut, which we believe will keep downwards pressure on prices next year.

This reality has so far led to greater caution among some buyers. Budgets get trimmed and extension plans deferred. As rates climb higher, some transactions will inevitably be halted altogether and downwards pressure on prices will intensify.

So the stamp duty cut is certainly welcome, especially by first-time buyers, and we expect that demand will remain strong.

Our Managing Director, Yasser Elkaffass spoke to GB News reporter Ellie Costello shortly after the announcement and confirmed that a changes would help first time buyers get onto the ladder.

To watch the full interview click here