Yahoo Finance Fastest rise in housebuilding for five years announced following coronavirus slump
The fastest rise in housebuilding activity for five years today fuelled hopes of a strong recovery from the deep economic slump triggered by the lockdown.
The surge was revealed in an upbeat PMI survey of the construction sector, which returned to growth for the first time since January.
The survey’s index, compiled by analysts IHS Markit, bounced from 28.9 in May to a better than expected 55.3 in June. A reading of 50 marks the dividing line between growth and contraction.
It came as shares in leading housebuilder Barratt Developments surged more than six per cent after it said its forward order book at the end of June ahead was of last year.
Gareth Belsham, director of the property consultancy and surveyors Naismiths, said: “The construction sector was one of the first to see lockdown restrictions eased, and it has responded with a gravity-defying, V-shaped recovery in output.”
However, there were also fears today that the confidence returning to the property market risks being “stopped in its tracks” today after reports that Chancellor Rishi Sunak is planning to announce a stamp duty holiday starting in the autumn.
Experts said it would be a huge mistake to let people think they could save money by postponing their purchases, as they may pull out of exchanges and disrupt the fragile recovery of the critical sector.
“My message to Rishi Sunak would be, if you are thinking of doing this, then please do it immediately and do not say you are thinking of doing it later,” said estate agent Jeremy Leaf, of Jeremy Leak & Co. “It would be a big mistake to announce this before it happens.”
The alarm followed reports in four newspapers that Mr Sunak was preparing to announce a temporary suspension of the unpopular tax on homes worth under £500,000. The Times said he would set out the plan in Wednesday’s economic statement to Parliament, and that the holiday would not be implemented until after the autumn budget. The Mail carried a similar report, but said it would not be announced until autumn.
Paul Johnson, head of the independent Institute for Fiscal Studies, said the it could have a “terrible” effect on the market because people would ask themselves if they could save money by delaying their house move..
“Pre-announcing this would clearly have a terrible effect on the market I the short term,” he said. “Even just the expectation of a cut will have an effect. It is significantly likely to dampen the market until then.”
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