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Exploring the Effects of the Spring Budget on the UK Property Market 

The UK property market is closely intertwined with government policies, and the spring budget plays a significant role in shaping its landscape. In this comprehensive post, we delve into the impact of the latest spring budget on various aspects of the UK property market, providing insights and analysis for property investors, homeowners, and industry professionals. 

Overview of the Spring Budget 

The spring budget, presented annually by the UK government, outlines fiscal policies, economic forecasts, and spending plans that can directly influence the property market. We analyse the key announcements related to housing, property taxes, and infrastructure investments made in the latest budget. 

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Impact on Property Prices and Market Trends 

One of the most immediate effects of the spring budget on the property market is its impact on property prices. We examine how changes in stamp duty, capital gains tax, and other property-related policies have influenced price trends and market dynamics across different regions in the UK. 

Stimulating Housing Market Activity 

The spring budget often includes measures aimed at stimulating housing market activity, such as incentives for first-time buyers, funding for affordable housing projects, and initiatives to promote property development. We assess the effectiveness of these measures in boosting housing transactions and addressing supply-demand imbalances. 

Implications for Property Investors and Landlords 

Property investors and landlords are key stakeholders in the UK property market, and the spring budget can have a direct impact on their investment strategies and profitability. We analyse how changes in taxation, regulations, and incentives introduced in the budget may affect the decision-making process for property investors and landlords. 

Sustainability and Green Initiatives 

In recent years, sustainability and green initiatives have gained prominence in the property market, with the government setting ambitious targets for reducing carbon emissions and promoting energy-efficient buildings. We explore how the spring budget aligns with these sustainability goals and its implications for property developers and homeowners. 

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Future Outlook and Expert Predictions 

Looking ahead, we provide expert insights and predictions on the future trajectory of the UK property market in light of the spring budget announcements. Industry professionals weigh in on potential trends, challenges, and opportunities that may arise as a result of the budget measures. 

Conclusion: 

The spring budget serves as a critical policy tool that shapes the dynamics of the UK property market, influencing prices, market activity, investment decisions, and sustainability initiatives. By understanding the implications of the budget on the property market, stakeholders can make informed decisions and navigate the evolving landscape with confidence. 

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Housing market shows signs of picking up

Signs of life were seen in the UK housing market in the new year with a rise in the number of mortgages being approved.

Activity remains weak overall, with potential buyers still nervous about high interest rates.

But the latest Bank of England data shows approvals for house purchases rose to 55,200 in January from 51,500 in December.

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This was the highest level since October 2022. Borrowing on credit cards also picked up last month. People took on £1.9bn more in credit on cards, car finance and other loans in January than they repaid.

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Mortgage lenders have been shifting the interest rates charged on home loans at a rapid rate since the start of the year. This started with some significant cuts to the cost of new fixed-rate deals.

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BBC News

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UK house market sees ‘respite’ as mortgage rates ease

The UK’s beleaguered housing market enjoyed some “respite” as buyer activity picked up amid easing mortgage rates, according to an influential property professionals survey found.

Housing professionals said there had been a gradual improvement in market sentiment, influenced by the recent easing of mortgage interest rates, according to the December 2023 report from the Royal Institution of Chartered Surveyors (Rics).

Newly agreed sales figures also suggest a less negative market and short-term sales expectations have also risen with the year ahead and expectations are the most positive they have been since January 2022. The average time to complete a sale is also decreasing, now averaging 18 weeks, down from 20 weeks in September.

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Prices have continued to fall but the rate of decline slowed, Rics said. It forecast prices will continue to creep downwards, before stabilising by the end of the year. Professionals predicted a solid recovery in home sales volumes emerging in 2024.

New data from the Office for National Statistics published this week showed prices were down by 2.1 per cent on the year, which is the biggest drop since June 2011.

The latest feedback on house price expectations remains varied across the UK. House prices in Scotland are expected to rise in first three months of this year – the first-time that Scottish respondents’ three-month expectations for prices have moved into positive since May 2022.

This coincides with an overall improvement in sentiment within the Scottish residential market, according to respondents, which appears to be linked to the trend towards lowered mortgage rates.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Together with Northern Ireland and north-west England, Scotland is one of the only areas of the UK where respondents expect prices to move higher over the course of 2024.

Tenants are likely to face rises of over 4 per cent over the next year as supply of rented accomodation continues to be constricted. The Rics professionals believe rental growth will average 5 per cent a year over the next five years.

Tarrant Parsons, Rics senior economist, said: “With 2023 proving to be a particularly challenging year for the UK housing market, it appears recent weeks have seen a little bit of respite emerge.

“Supported by an easing in mortgage interest rates of late, buyer demand has now stabilised, and this is expected to translate into a slight recovery in residential sales volumes over the coming months.

By David Connett

Source: i News

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UK house prices to rise by 3% in 2024

Knight Frank has revised its UK house price forecasts as inflation is falling faster than expected, with the company now suggesting that house prices will rise by 3% in 2024.

This compares to a decline of 4% which was predicted in October.

Knight Frank also expects cumulative growth of 20.5% in the five years to 2028.

This is partially a result of stronger demand, as the number of mortgage approvals was 10% higher in November than the previous year and the firms expects a double-digit percentage increase in sales volumes this year compared to 2023.

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The report forecasts slightly lower growth for the mainstream London market (+2%) this year as continued affordability constraints in the capital mean lower-value areas of the country are likely to outperform.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

In the prime country house market, Knight Frank expects a narrower decline this year (-2%) as the market comes down from the highs of the pandemic in recent years.

By Jodie Bradley

Source: Bridging & Commercial

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Property industry delivers verdict on new UK house price data

Property prices in the UK rose for the third consecutive month in December 2023, according to the latest Halifax HPI data.

The cost of an average UK home rose to £287,105, up £3,066 (+1.1%) from November, reaching the highest level since March 2023.

According to Halifax, this means the housing market beat expectations in 2023 and grew by 1.7% on an annual basis.

The average property price is now £4,800 higher than it was in December 2022.

Kim Kinnaird, director for Halifax Mortgages, said: “Whilst it’s encouraging that we saw growth in the last three months of the year, this was preceded with property price falls for six consecutive months between April and September.

“The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand. That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.”

Across all the UK regions, Northern Ireland recorded the strongest house price growth in 2023, with properties increasing by 4.1% to £192,153. Scotland saw property prices rise by 2.6% to £205,170.

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At the other end of the scale, the South East fell most sharply, with houses there now averaging £376,804, down by £17,755 (-4.5%).

Kinnaird said: “As we move through 2024, the UK property market will continue to reflect the wider economic uncertainty and buyers and sellers are likely to be naturally cautious when considering making a move.

“While wage growth is now above inflation, helping to ease cost of living pressures for some and improving housing affordability, interest rates are likely to remain elevated for as long as inflation remains markedly above the Bank of England’s target.

“Our latest forecast suggests house prices could fall between 2% and 4% during the coming year, although, as with recent years, forecast uncertainty remains high given the current economic climate.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

More reaction

Anthony Codling, managing director, equity research, RBC Capital Markets, said: “The demise of the UK housing market is somewhat over reported. Most, including us, thought house prices would fall during 2023, and most think they will fall in 2024, but not us.

“With rising wages, falling inflation, falling mortgage rates, and increasing talk of election-related housing stimulus packages, we expect house prices to rise in 2024. Our pessimism was misplaced in 2023, and we don’t want to make the same mistake twice.”

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Source: Property Industry Eye

By Jerome Smail

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Falling inflation could boost the housing market – but there’s a catch

A consequence of the Bank of England’s decision to raise interest rates in order to bring down inflation was always that they could cause the housing market to stall and potentially tip Britain’s economy into recession.

Today, the Bank’s Monetary Policy Committee (MPC) will feel vindicated in its strategy, with the rate of inflation unexpectedly falling by more than expected to 3.9 per cent. This is its lowest level since September 2021, but still double the Bank’s 2 per cent target.

The MPC will also be glad that while the UK’s economy did shrink in the final quarter of this year, the prospect of a recession (which is where the economy contracts two quarters in a row) remains hypothetical.

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However, the data also show that the MPC’s decision to repeatedly make the cost of borrowing more expensive did indeed stall the housing market.

Both the Bank’s mortgage data and HMRC’s data show that the number of mortgages agreed and the number of homes being sold are lower than they would usually be, indicating that the housing market was grinding to a halt this autumn.

Now, data from the Office for National Statistics (ONS) show that in the year between October 2022 and 2023, UK house prices fell at the fastest pace in more than a decade.

Average house prices declined by 1.2 per cent during that 12-month period. This is the largest drop since October 2011 when the fallout of the 2008 global financial crisis was taking hold.

The greatest falls have been recorded in London (3.6 per cent), which is to be expected because pandemic house price inflation pushed the cost of homes up rapidly in many parts of the capital.

Some estate agents are trying to put a positive spin on this news. National chain Jackson-Stops, for instance, has issued a statement saying that it is a “minimal drop” which shows the market’s “enduring strength”.

That’s not quite the case. Think of interest rate rises as being more like drip filter coffee than espresso – rather than being an economic shot in the arm, they take time to feed through and their effects can be long-lasting, particularly when it comes to the housing market.

This is because there is a time lag between the Bank’s rate decision, banks setting their mortgage rates, people taking on those rates to buy homes, and the homes that they buy being recorded in the official ONS statistics.

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So, just as the true impact of 2008 wasn’t felt until the early 2010s, it won’t be possible to say with any certainty how much house prices have fallen for a little while yet.

The ONS data is the most comprehensive measure of UK house prices because it includes cash purchases. It is also the most accurate but, because the ONS base their records on deals that have been finalised and recorded by the Land Registry, they are less timely than those belonging to lenders such as Halifax and Nationwide.

There is a time lag between what’s actually happening in the housing market and what the ONS records show.

The news that the rate of inflation has come down has already resulted in calls – from the likes of the right-wing think-tank the Institute for Economic Affairs – for the Bank to abandon rate increases.

However, as the MPC made clear in the memo they published after deciding to hold the base rate at 5.25 per cent last week, they won’t hesitate to increase it further if there is any indication that inflation is on the up again.

If interest rates come down, it could pump the housing market up once again. Indeed, financial markets are already speculating that the Bank will cut rates next year and this will be priced into the cost of mortgages.

But, if we’ve learned anything over the last four years, it’s that things can turn on a dime.

The rate of inflation may be falling but everything is still more expensive than it was before the pandemic – from food shops to household bills. More than a million people will see their mortgages get more expensive next year.

And, even with mortgage rates at 4 per cent, the cost of having a mortgage will be significantly higher than it was in the ultra-low-rate world we lived in before Covid.

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I News

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Housing Market Activity Could Snowball In December

Research conducted by estate agent comparison site GetAgent.co.uk indicates a potential surge in the UK property market at the end of the year. Analysis of the past decade’s data shows that the number of homes completing in December is typically 6% higher than the average monthly total, belying the common perception of Christmas as a quiet period in the property market.

GetAgent’s study, which examined property sales data over the last ten years, reveals that December does not generally experience a dip in transaction completions. On average, 83,616 property sales have been completed each month over the past decade. However, in December, this number increases to an average of 88,673, marking a notable rise.

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Interestingly, in seven of the past ten years, the number of transactions completing in December actually increased compared to November. Despite this trend, the likelihood of finalizing a property sale on Christmas Day remains exceptionally low. Last year, only six sales were completed between Christmas Eve and Boxing Day, representing a mere 0.001% of the 810,450 homes sold in England and Wales in 2022. Out of these, three completed on Christmas Eve, two on Christmas Day, and one on Boxing Day.

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Colby Short, co-founder and CEO of GetAgent.co.uk, comments on these findings: “Christmas is often considered a bit of a lull period for the property market and this is true in some respects. There’s almost certainly a reduction in the number of motivated buyers and sellers pushing ahead to agree a sale, as plans are put on hold until after the festive break. At the same time, many progressing sales will see a slight delay due to the reduced office hours and staff numbers of estate agents, solicitors, and other required parties. However, for those approaching the home selling and buying finish line, December is business as usual, and market activity has actually sat above the monthly average benchmark over the last decade during the month of December.”

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Landlord Knowledge

By LK

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UK house prices rise for third straight month as mortgage rates fall

Nationwide says average property price was £258,557 in November, £5,231 down on same month last year

UK house prices rose for a third consecutive month in November as the market responded to hopes that mortgage rate costs had peaked.

Nationwide, the UK’s biggest building society, said prices rose 0.2% month on month in November, after a 0.9% rise in October and a 0.1% rise in September. Economists polled by Reuters had forecast a 0.4% fall in prices in November.

It is the first time that homeowners have seen the value of their property rise at least three months in a row since the summer of last year.

On an annual basis, prices were down 2% in November, the best in nine months and after a 3.3% year-on-year fall in October.

The average price of a home was £258,557 in November, £5,231 down on the value of a typical property in the same month last year.

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Nationwide said the improvement in the market has followed the view that the Bank of England’s move to hold the base interest rate at 5.25%, after a run of 14 consecutive increases, means soaring mortgage costs will start to drop, fuelling more activity in the housing market.

“There has been a significant change in market expectations for the future path of the bank rate in recent months which, if sustained, could provide much-needed support for housing market activity,” said Robert Gardner, the chief economist at Nationwide. “By the end of November this had shifted to a view the rates have now peaked and that they will be lowered to about 3.5% in the years ahead.”

In November, the Bank of England kept the rate at 5.25% for a second time, albeit still at a 15-year high, which has helped to push some two- and five-year fixed mortgage rates back down to below 5% – down from peak levels of more than 6%.

Last month, the sharp drop in inflation from 6.7% to 4.6% fuelled hopes that the Bank of England might start cutting rates next year.

However, earlier this week Andrew Bailey, the governor of the Bank of England, said there was no immediate prospect of an interest rate cut as the Bank faces a tough battle to bring inflation back to its 2% target.

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Mark Harris, the chief executive of the mortgage broker SPF, said: “The direction of travel for new mortgage rates is downwards, with a number of lenders making reductions this past week and bringing some early Christmas cheer to borrowers.

“However, while interest rates appear to have peaked, those hoping base rate will move swiftly downwards again to the rock-bottom levels of the recent past are likely to be disappointed. Pricing is higher than borrowers have grown used to over the years, meaning those buyers relying on mortgages are more price-sensitive on the back of ongoing affordability concerns.”

By Mark Sweney

Source: The Guardian

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UK’s housing market is now being driven by the over 50s

The UK’s housing market is increasing driven by older, affluent individuals already firmly entrenched in home ownership, in the latest sign that younger generations are being squeezed out.

The cost-of-living crisis, skyrocketing interest rates and stubbornly high house prices have made it increasingly hard for younger generations to move up the housing ladder, research from data science firm Outra reveals.

The average age of those tipped to move home in the next six months has surged 3.5 years in just 12 months amid signs younger households are being paralysed in their efforts to move home. That leaves the median age at 52.5 years-old, from 49 years-old last year.

The data indicates that every age band below the age of 45 is set to find it more difficult to move. The market is expected to be driven by older households, in particular those that already have significant equity in their homes over the age of 55.

Outra founder Giles Mackay said: “The UK’s housing market is now the preserve of the old and rich, and while a boom now will be welcome news to those involved in the day-to-day transactions given fears of a slowdown, there’s a real danger that what this trend indicates is the start of an inheritocracy.

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“Retiring boomers may be looking to move to a house in the country, seek a new life abroad or downsize and pass on that wealth to their millennial children who otherwise would not be able to get onto the ladder.”

Separate research by Savills shows that more than half of downsizers – 51% – have owned their homes for over 20 years, and three quarters – 75% – for more than 10 years.

Savills research into attitudes to moving reveals that older sellers, typically downsizers and empty nesters are amongst the most committed buyers in the market, with a net balance of +52% planning to move in the next one to two years. But, emotions play a significant role in the decision to move.

Savills survey of almost 2,000 buyers and sellers probed feelings about moving home. When asked what was the driving motivation behind moving, lifestyle factors are revealed to be the most important to downsizers and empty nesters. Almost half (48%) hope to ‘right size’, looking to live in a more manageable sized property, while a quarter (24%) are seeking a lifestyle change .

Releasing equity to fund retirement, or to help family members was a top priority for 18% of downsizers and empty nesters surveyed. This comes as 164,000 first-time buyers are expected to receive family assistance in getting their mortgage in 2023, according to latest estimates from Savills research.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

According to the Savills survey findings, owner-occupiers aged 65-plus hold a record estimated £2.587trn of net housing wealth in homes worth a total of £2.735trn. The vast majority of which is held by mortgage-free homeowners (£2.038trn). This has risen by £1.111trn over the past 10 years.

Frances McDonald, director of research at Savills, commented: “Those looking to downsize or move on from long-term family homes are in a strong position in today’s market, many having benefitted from the strong house price growth of the past 20 years.

“Many in this cohort are likely to become cash buyers when they sell their family home, and are therefore less exposed to the concerns around rising interest rates. This means they place a greater significance on the emotions of moving, as opposed to the financials.”

By Marc Da Silva

Source: Property Industry Eye

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House prices surge at fastest pace this year to record £373k despite Bank of England rate hikes

Britain avoiding a much-forecasted recession has helped push house prices up by the greatest amount so far this year to a record high of £372,894, new figures out today reveal.

The average price of a home coming to market climbed 1.8 per cent over the last month, the strongest increase in 2023, according to property search site Rightmove.

Over the last year asking prices have jumped 1.5 per cent.

Britain’s housing market has defied a glut of gloomy predictions tabled at the turn of the year sparked by the country’s economic prospect at the time looking pretty bleak.

Households were forecast to suffer the worst squeeze on their living standards on record, the Bank of England expected the UK to be gripped by the longest recession in a century and unemployment was on course to rise.

However, a combination of international gas prices sliding and the government capping energy bills at £2,500 has put the UK on track to dodge a recession, convincing buyers to snap up a new home and sellers to cash in on their property.

Booming confidence in the housing market is down to the “gloomy start-of-the-year predictions for the market… looking increasingly unlikely,” Tim Bannister, director of property science at Rightmove, said.

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UK house prices are holding up well despite sustained pressure from higher rates

House prices surge at fastest pace this year to record £373k despite Bank of England rate hikes Commercial Finance Network
Source: Rightmove

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“Steadying mortgage rates and a generally more positive outlook for the economy are also contributing to more seller confidence, though there are likely to be more twists and turns to come,” he added.

A paucity of homes coming to market has kept prices elevated, although supply could expand in response to increasing home fees.

Sellers on average had to chalk 3.1 per cent off of their initial asking price in order to source buyers in April, Rightmove said.

Last month’s rise illustrates that demand is still holding up well in the face of the Bank of England’s twelve successive interest rate hikes, taking them to a near 15 year high of 4.5 per cent.

Mortgage rates have surged over the last year due to lenders passing on Bank Governor Andrew Bailey and co’s moves, though they are below the sky high levels they reached after Liz Truss’s mini-budget jolted UK debt markets. The Bank is expected to raise borrowing costs at least one more time this year.

London house prices climbed faster than the national average on an annual basis, up 2.8 per cent to nearly £700,000. The only area in the UK which recorded a drop in asking fees was the north east.

Hackney house prices in east London rose the fastest in the capital, up 5.3 per cent over the last year to £724,000. Southwark came second, with prices up 4.3 per cent to £673,000.

By Jack Barnett

Source: City A.M.