Not so for the housing market, though, as this has remained open for business and has in fact delivered year-on-year growth.
There were 50 per cent more transactions in Q1 2021 than the same period in 2020, before Covid-19 had made its effects known. This surge in homebuying has without a doubt been fuelled by the government’s stamp duty holiday.
It’s clear that the holiday’s stated aim has been achieved – it was designed to stimulate activity, and that’s exactly what happened. However, some in the industry have been critical of the tax break, arguing that higher levels of demand drove prices up and cancelled out the savings it delivered.
While it’s true that prices were probably driven up, the conclusion that the holiday’s benefits have been erased is wrong. What the holiday has done is democratise homeownership by reducing the amount of upfront capital needed to get on the property ladder.
For brokers, the holiday has injected huge volumes of business into the market.
Brokers’ primary aim is to help clients get the keys to a new home, and lowering the financial requirements at the start of the journey has made that task easier. Budgets were stretched further and buying power was increased, and their advisory role was more important than ever in helping clients to get the best deal.
First-time buyers were some of the biggest beneficiaries, and those most in need of broker advice, so the holiday not only helped them but created more demand for intermediary services.
A case for technology adoption
That demand has had a similar effect for tech providers, as greater need for advice put broker workloads under strain. In particular, the ability to quickly adopt and roll out a solution became more and more important, and the providers which were best able to do this experienced the best results.
They key challenge for providers as the sector moves back to normality is to ensure that momentum doesn’t dissipate. Adoption has skyrocketed, but if a drop in demand is brought by the final tapering of the stamp duty holiday progress might be lost.
What the holiday has done is shown that brokers are receptive to technology when it makes a tangible difference to how well they can do their job and how well their business can perform.
Therefore, we have to say that its impact has been positive for tech providers, even if their challenge will continue beyond its end.
That said, brokers and tech providers aren’t the only ones needed to play ball if the benefits of the holiday, and the interesting lessons it has taught us, are to be carried forward.
The relationship between lower stamp duty land tax and higher activity rates is clear, and if it were to continue in some form, the housing market’s post-Covid boom may become a long-term trend rather than just a flash in the pan.