Now UK housing market is beginning to downshift. No wonder would-be buyers are nervous as jitters increase over rumored tax hikes in this fall’s budget. Rachel Reeves, the newly appointed Shadow Chancellor, recently hinted that individuals with the “broadest shoulders” should contribute their “fair share” of taxes in an interview with The Guardian. This comment has sent shockwaves through the real estate industry, especially as we head into a traditionally busy fall season.
Next month, when Reeves presents her budget, we’ll see exactly how much she plans to invest. She has committed to bring forth new legislation that will address inflation directly. The mud of this possible morass is making buyers and sellers gun-shy. Compared to just a few months ago, national transaction levels have remained flat due to relatively stable mortgage rates and declining home prices. For the second consecutive year, demand has begun to drop.
The landscape is changing, according to Tom Bill, head of London residential research at Knight Frank, a global property consultancy.
“Transaction numbers over the last six months have been supported by stable mortgage rates and softer prices as sellers come to terms with the fact that high levels of supply mean it is a buyer’s market.” – Tom Bill
More recently, Bill has noted how the prevailing environment of speculation is twisting market forces.
“However, demand is wavering for the second successive year as the autumn market gets under way, as speculation over the budget becomes a prolonged and frustrating game of ‘guess the tax rise’.” – Tom Bill
Those in the property sector seeking to rent, buy or sell are particularly concerned about what increased taxation might mean. This fear is most acutely felt by those in the south of England. Colleen Babcock, the other industry analyst, pointed out that most buyers are taking a wait-and-see attitude.
“Speculation that the budget may increase the cost of buying or owning a property at the higher end of the market has given some movers, particularly in the south of England, a reason to wait and see what’s announced in the budget.” – Colleen Babcock
Reeves’ third budget takes a broader focus on economic issues. She has promised, and we expect her newly installed government to follow up with firm action, to kick start housing starts and make housing more available. A Treasury spokesperson outlined some initiatives, stating:
“We are taking action to get Britain building so more new homes are available, including through strengthening call-in powers, tearing up burdensome regulations, and streamlining planning permissions with AI to get spades in the ground more quickly.” – Treasury spokesperson
Particularly with the housing market poised to weather significant storms, stakeholders will be carefully awaiting Reeves’ budget announcement early next month. The result would be a major impact on both overall market conditions and buyer sentiment, successively trickling down over the following months.