Uk Property Market Review: After The Mini-Budget, Is The Damage To The Uk Property Market Too Extensive For An Immediate Bounce-Back?


Chancellor Kwasi Kwarteng lowered stamp duty and land tax rates, saving the typical English home buyer hundreds of pounds. While many real estate professionals have praised the decision to permanently raise the nil-rate STLD band for giving the market a “great boost,” others have criticized it as “irresponsible” for their concern that it will make the already unequal system worse.

Following Mr. Zahawai’s decision to boost the threshold at which buyers must pay stamp duty land tax, the measure made public by the Chancellor is anticipated to cause a surge in housing prices.

However, while a price increase may seem good news for sellers, it may not be so good for buyers trying to get ahead.

Will Property Prices Soar?

With data indicating that the average home sold in England costs the equivalent of 8.7 times the average yearly disposable income, properties in the UK are now more out of reach than ever.

According to new statistics, despite tighter buyer budgets due to economic uncertainties, the severe lack of available housing has increased average prices.

There is a higher danger that home prices will grow once again as demand soars, and this is because of the low supply and the “frenzy” fostered by the government.

However, there is a worry that the market’s injustice will only get more “baked in” without a rise in the number of available properties. Those hoping to climb the ladder soon may have only seen it pushed higher and farther away.

Is The Damage Too Extensive?

According to Stephen Taylor, an entrepreneur, and philanthropist, it isn’t easy to foresee what the future holds for the mainstream housing market at this time until we have a better understanding of how the Bank of England and lenders will respond to recent events. That suggests, at the very least, a pause in the market over the short term.

Following that, a lot will depend on what policymakers and lenders do to lessen the possible impact of a sudden rise in interest rates.

From the standpoint of a new buyer, sharp increases in interest rates will restrict the amount of debt they are willing to take on or able to obtain from their lender. Given the high levels of uncertainty in the mortgage markets, we anticipate that many prospective purchasers will hold off on purchasing in the near future, especially those who depend on high loan-to-value borrowing.

Some people may continue with a smaller budget, while others will leave the market until rates return to a more reasonable level if they look further. As a result, we anticipate a period of lower transaction levels, much like we have in the past during earlier periods of market volatility.

Final Take

In general, there is no doubt that 2023 will witness both price pressure on the decline and a decline in transaction volume. However, given the current situation, it is challenging to be sure of the trade-off between the two. How long the inflation takes, and the environment of interest rates to normalize will determine the market’s prospects in the long run.

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