The chancellor was accused of failing to tackle the first-time buyer crisis, after he sprang a nasty surprise on those hoping to get on the property ladder by not extending the stamp duty holiday beyond next March.
It was the only announcement on housing that had not been trailed before the autumn statement.
The government is trying to breathe life into the housing market by reinvigorating the right to buy scheme, underwriting mortgages for 100,000 young families looking to buy newly built homes, and launching a £400m fund to enable housebuilders to construct up to 16,000 homes. But George Osborne was sharply criticised for not doing enough to help first-time buyers and boost housebuilding.
Peter Spencer, chief economist to the Ernst & Young ITEM Club, said: "One area where the chancellor fell short of expectations was making the housing market more accessible to first-time buyers. The stamp duty tax relief will end in March 2012 as planned and there were no further measures along the lines of guaranteeing bank loans to first-time buyers."
"Osborne gives with one hand, and takes away with the other," said Peter Rollings, chief executive of estate agent Marsh & Parsons. "The failure to extend the holiday for first-time buyers will undermine the government's own attempts to kickstart the first-time buyer market across the country. While the new mortgage indemnity scheme may improve the accessibility of mortgage finance to many credit-worthy borrowers, first-time buyers will need to save for longer to pay the stamp duty bill as they move."
Property consultants CBRE estimates around 1.4 million would-be first-time buyers have been unable to enter the market over the last decade.
The independent Office for Budget Responsibility assumes a strong recovery in the housing market in coming years, upon which the Treasury's stamp duty take is reliant. Revenues from stamp duty on land, both residential and commercial, are forecast to almost double from £6bn this year to £11.4bn in 2016-17, according to the OBR's latest projections. The bulk, £4.1bn this fiscal year and £8.6bn in 2016-17, will come from residential sales. A spokesman said the OBR anticipates a gradual recovery in property transactions and that prices will pick up steam in the later years, returning stamp duty revenues to levels seen before the financial crisis.
As expected, the government is reviving Margaret Thatcher's right to buy scheme – one of the most popular 1980s policies – under which up to two million council houses could be sold to tenants. Osborne described it as "one of the greatest social policies of all time" that had been "slowly and stealthily strangled" by the last government. Families will be offered discounts of up to 50% below market value. Receipts from the sale of council homes will be used to build, for every home purchased, a new affordable home.
"It will take three to five years for the newly built properties to come onto the market," said Robin King, director at property firm Move With Us. "If there is a sudden large uptake of buyers, how does the government plan to address the lack of available housing? Social housing is often built in 'uneconomic sites', in areas that will struggle to attract buyers. Will this help to regenerate deprived areas, or will we end up with an oversupply of properties that cannot be sold?"Meanwhile, the £400m fund to kickstart projects that already have planning permission, for construction firms that can't get bank finance, was welcomed by business groups.
John Longworth, director general of the British Chambers of Commerce, said: "In cities and towns across England, regeneration projects are stalled, with a serious impact on local business confidence. The £400m Get Britain Building fund will help unlock progress on some of these sites, which will have a positive impact on a wide range of local companies involved in construction and its supply chains. Ministers must speed the fund's implementation so we see more spades in the ground quickly."