Osborne ‘won’t stoke the UK property bubble’

British chancellor of the Exchequer George Osborne’s tax cut for homebuyers isn’t reviving concern about another property bubble.

That is according to Bloomberg’s monthly survey, which showed two-thirds of 36 economists don’t expect the move to increase the risk of overheating. The UK chancellor of the exchequer announced the decision to reduce transaction taxes on most homes on December 3, five months before the general election.

The £800m (€1bn) stamp-duty overhaul, which comes at a time the housing market is cooling, will add support by giving buyers extra cash for a down payment, though it’s impact may be limited by tougher mortgage rules.

“The stamp duty reform won’t on its own lead the housing market back to overheating,” Rob Wood, an economist at Berenberg Bank in London. “But it’s a significant stimulus for parts of the market at a time when interest rates remain very low, house building is woefully short of what’s required, and the economic recovery continues,” he said.

Mortgage approvals fell to the lowest in more than a year in October and the Royal Institution of Chartered Surveyors said last week that its house-price index dropped to its weakest since May 2013.

The Bank of England introduced measures to limit risky mortgages at the Financial Stability Report in June, citing the need to shield financial stability from risks posed by residential property.