Reducing the top rate of stamp duty in tomorrow's Budget would not just be "a cheap trick to give a fillip to the property market", IIB economist Austin Hughes said.
Speaking at the launch of the first IIB Bank/Irish Mortgage Advisers Federation survey of mortgage brokers, Mr Hughes urged Minister for Finance Brian Cowen "to take away some of the nerves" in the property market.
Mr Hughes said a reduction in the top rate of stamp duty would inarguably increase property-related tax receipts but he didn't think Mr Cowen would cut the top rate. It depended on whether Mr Cowen "sees himself as a passenger rather than a driver."
The survey, in which 300 mortgage brokers were contacted last month, shows that 19 per cent of brokers said a reduction in stamp duty would provide the greatest support to the market. However, 41 per cent said a more favourable interest rate outlook was necessary, while 34 per cent said concerns about the general health of the economy needed to be removed. Just 2.7 per cent said broadening mortgage interest relief beyond first-time buyers would improve the market.
Some 35 per cent of brokers surveyed said the Government should reduce stamp duty, compared to most brokers (37 per cent) who said it should ensure the economy remains healthy.
Mr Hughes said the property market was slowing down not because of a problem with supply but due to a weakness in demand. "The main problem is that people don't have confidence," he said, adding that there was currently "a stand-off" in the market between buyers and sellers who are waiting for better prices.
Half of all brokers said their business had weakened since August. Some 28 per cent see business declining further in the next three months, with 41 per cent forecasting "largely unchanged" conditions.
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