27/11/2017 14:57 GMT | Updated 27/11/2017 14:57 GMT

Chancellor’s Early Christmas Present For First-Time Buyers Not As Great As It Sounds

With jokes coughed up at Theresa May’s expense it was clear the Chancellor was happy to play to the crowd.

But it wasn’t just happening inside the House of Commons.

The biggest vote winning carrot was thrust firmly in the direction of millennials, young families and first-time buyers.

This bunch have been squeezed harder than a squeegy at a car wash lately with flat wages, booming house prices, soaring university fees and rising inflation.

To a politician’s mind, this group were in danger of feeling left behind so it was clearly all too tempting to hand them a leg up onto the housing ladder. First-time buyers will now pay no Stamp Duty on the first £300,000 of homes up to £500,000.

The announcement was designed to have maximum impact, left to the very end of the speech... but is everything as it seems? Look under the bonnet of what was perhaps the most headline-grabbing announcement of the Budget and it may do more harm than good.

In actual fact the policy will only cost the Treasury £560 million - a drop in the ocean in terms of government finances. And the policy looks even more tame when you see it from the perspective of first-time buyers themselves.

The average Stamp Duty bill for first time buyers is really only around £1,600 with an average property value of about £205,000. Compare that saving to the deposit most will have to squirrel away -  something in the region of £30,000 - and the Chancellor’s giveaway doesn’t really do much to move the needle at all.

There’s no such thing as a free lunch either and if you turn to the side-effects of a policy like this it is actually counterproductive. First-time buyers all have one problem in common. They all want to buy similar types of property, in similar areas and are all struggling to afford them.

Handing all these people the same discount sounds great, but unfortunately all it will mean on the doorstep is that each of those buyers has, on average, an extra £1,600 in their pocket.

The likely result is that prices will rise and homes will be just as unaffordable as before. With the extra spending power unlocked by the Chancellor, house prices only have to rise 0.8% to offset the benefit.

And it also creates another cliff edge, similar to those we were used to under the old slab tax system of Stamp Duty.

The number of homes for sale at just under £500,000 is likely to increase as they bunch together at the point that first-time buyers lose the Stamp Duty relief on the first £300,000 altogether. Someone buying at £500,001 will suddenly find they are paying £5,000 more in Stamp Duty on a home worth just £1 more. Increased competition for those trying to sell at £520,000 is likely to force many to drop their price to come in under this cliff edge.

As a result, we will likely see a growing concentration of properties under this level and, above £500,000, fewer and fewer properties, which will mean it is harder for people selling homes under £500,000 to move up the ladder.

The Chancellor did offer two antidotes to all this.

The council tax premium that will be levied on empty homes will boost supply in areas where there is high demand.

And the Chancellor announces a host of measures to boost housebuilding. It’s this second move that turned heads and offers the greatest hope of real change.

He boosted spending on housebuilding, threatened property developers practising landbanking with compulsory purchase orders and pledged to increase housebuilding to 300,000 a year by the mid 2020s.

This is all to be applauded. It’s just a shame a Stamp Duty stunt that won’t make any difference is what everyone will remember.