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Will the return of stamp duty kill the housing market?

The stamp duty holiday for the UK housing market is set to end on 31 December and there are concerns that early 2010 could see a slump in demand and a slump in prices across the UK. There is no doubt, as with the UK car scrappage scheme, there has been significant manufactured demand in the UK housing market primarily because of the extended stamp duty holiday. But is the UK property market able to recover by itself?

When you consider that the market has had the help of a stamp duty holiday it is difficult to see how it can move forward at the same pace when you take into account the reduced mortgage liquidity and various "hotspots" throughout the UK. When you also take into account the fact that UK unemployment is set to rise for the foreseeable future, albeit at a slower rate than we have seen in the past, there are few positive short-term positives for the UK property market.

There are many within the UK property sector that believe the government, whoever it may be after the next general election, will need to look at further incentives for UK homebuyers in the short to medium term. The property market is the key to a recovery in the UK economy but at this moment in time it is proving very difficult to forecast the short to medium term performance.

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