British homeowners faced uncertainty in the lead-up to Rachel Reeves’ Budget announcement last week, wondering what the changes might mean for their property values.
The property market has been frozen and frustrated for months, with buyers, sellers, and investors all pressing pause as they waited for the Government’s decision.
But thankfully, in the post-Budget aftermath, there is some reassurance from Nationwide’s latest figures.
The building society’s latest house price index reveals that annual growth has eased slightly, dropping to 1.8 per cent compared with 2.4 per cent the previous month. Despite this softening, prices still managed to edge up by 0.3 per cent month-on-month.
The average property in the UK now sits at £272,998, up from £272,226 in October. It’s a modest rise, but it shows the market is ticking along steadily.
Robert Gardner, Nationwide’s chief economist, believes the market is showing real grit in tough conditions.
The market is showing real grit in tough conditions, according to Nationwide’s chief economist
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He said: “The housing market has remained fairly stable in recent months, with house prices rising at a modest pace and the number of mortgages approved for house purchase maintained at similar levels to those prevailing before the pandemic.”
According to the expert, what’s particularly impressive is how well things are holding up given the headwinds.
“Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before Covid struck and house prices are close to all-time highs,” Mr Gardner added.
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‘The changes to property taxes are unlikely to have a significant impact on the housing market’
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PAFor those worried about the Budget’s property tax shake-up, the expert expressed confidence, assuring Britons: “The changes to property taxes are unlikely to have a significant impact on the housing market.”
The new High Value Council Tax Surcharge (HVCTS) – or mansion tax – which won’t kick in until April 2028, will exclusively affect homes worth £2 million or more.
This means it will apply to a tiny fraction of homeowners: less than one per cent of properties in England and around three per cent in London, the expert noted.
Looking ahead, the economist sees reasons for optimism on the affordability front, predicting likely improvements “if income growth continues to outpace house price growth as we expect”.
“Borrowing costs are also likely to moderate a little further if Bank Rate is lowered again in the coming quarters,” he added.
In more good news, “the ratio of household debt to disposable income is at its lowest for two decades”, Mr Gardner concluded, suggesting exciting opportunities for potential buyers.