The mini budget of 2022 was designed to stimulate growth. But since the last Chancellor of the Exchequer made his announcement in September, the UK economy has been in turmoil.
In an attempt to inject some stability into the financial markets, our current Chancellor has now reversed his predecessor’s tax-cutting spree. He has also set out his own economic plan and warned us to expect difficult times ahead.
What does that mean for me?
Interest rates, which affect the cost of mortgage repayments, were already rising before the mini budget. Now it’s predicted that the rates – currently above 6 per cent – could go up even more. Higher mortgage costs, together with the rising cost of living, will inevitably put a squeeze on people’s finances, making them less inclined to move home.
So is it all doom and gloom in the UK housing market, or will the storm clouds part to show us a silver lining?
Stamp Duty cut
There’s one immediate bit of good news to share. Stamp Duty Land Tax – the tax you pay when you buy a property – has now been permanently cut. First time buyers can expect a discount of up to £11,250, while other homebuyers can enjoy an average tax cut of £2,500.
Will house prices drop?
Recently our estate agents in Ilford have seen some sellers reduce the price of their properties, and our Barkingside estate agents have also noted price reductions. In most cases, this reflects a seasonal trend, with sellers keen to attract a buyer so they can move before Christmas.
House prices actually edged up by 0.9% in October, but most property experts predict a gradual fall in the market value of UK property. Some have estimated prices could drop by as much as five per cent in the longer term.
Could interest rates rise even more?
When the mini budget was first announced, mortgage lenders reacted by pulling many of their mortgage deals. These deals are now coming back onto the market, but at a higher cost.
Rightmove has already seen a fall in demand from first time buyers, as tighter lending restrictions make it harder to secure a mortgage offer.
The future of rate rises will depend on whether the financial markets are happy with the new Chancellor’s scheme to cut UK debt. The government has promised to publish a fully-costed plan at the end of this month. If this helps to calm the market’s jitters, interest rates may settle.
Is this a good time to sell?
The demand for homes may be slowing, but it is still above 2019 levels. Zoopla expects to see continued demand from “a smaller group of committed buyers”. Sellers who are prepared to price realistically at this time stand a better chance of a successful sale.
If you are planning to buy or sell this year or next, good advice could save you time and money. Our local property experts are always on hand to chat through your plans, so why not give us a call?
Call us on 0203 972 7341 or email info@oaklandestates.co.uk.
Properties for sale in Barkingside and Ilford
Properties to rent in Barkingside and Ilford
Don’t forget to follow our socials for the latest property market advice and listings:
https://www.facebook.com/Oakland-Estates-1426149597689066/?fref=ts
https://twitter.com/OaklandEstate
