The reduction in property transfer tax from 6% to 2% will encourage people to buy houses but will also worsen the market for new property, according to ING economists.

Estate agents have already reported a surge in interest from house hunters since the tax cut was introduced last week. However, new property is not liable to transfer tax, so will not benefit from the effective cut in the cost of buying a home, the economists say.
In the first three months of this year, 6,600 newly built homes were bought, down from 8,400 a year earlier.