The housing market pre Budget: What to expect
As we approach the upcoming Budget announcement, many are left pondering the state of the housing market in East Kent and its trajectory. Recent trends suggest a shift in buyer sentiment, with some holding off on purchases in anticipation of clearer economic signals.
Whether you’re considering making a move or are simply interested in the market’s direction, we’ll explore the key indicators, lending conditions, and overall market stability.
August Rightmove's House Price Index
According to Rightmove's latest House Price Index, the average price of properties listed for sale has experienced a seasonal decline of 1.5% this month (£5,708), bringing the figure to £367,785. This trend of reduced asking prices in August has been consistent for the past 18 years, with this month’s decrease aligning with the long-term average. The school summer holidays typically distract potential buyers, causing many to delay their home-moving plans in favour of enjoying time off or travelling with family. Those who list their homes during this quieter period often have a more urgent need to sell and thus price their properties more competitively.
Interestingly, this year’s summer sellers might encounter a renewed sense of buyer interest, absent during last year’s peak mortgage rates. As predicted in Rightmove’s July report, the Bank of England’s first rate cut in four years at the beginning of the month has spurred a drop in mortgage rates, significantly boosting buyer demand. These favourable conditions are laying the groundwork for a buoyant autumn market. In light of the increased market activity following the bank rate cut, Rightmove has adjusted its forecast for 2024. Previously predicting a 1% decline in new seller asking prices for the entire year, the revised outlook now anticipates a 1% increase. This adjustment reflects the improved market sentiment and the expected continuation of positive trends.
What are the positives?
Since the bank rate cut on 1 August, the number of potential buyers contacting estate agents to view homes for sale has increased by 19% compared to the same period last year. This period last year was notably subdued, as the market was grappling with the effects of unexpectedly high inflation and peak mortgage interest rates. However, the current improvement in buyer demand, up from +11% in July, highlights the immediate and significant impact of the first bank rate cut since 2020. Agents note that increased political stability and an improving economic outlook are also contributing to heightened buyer interest.
The positive influence of the bank rate cut, coupled with other encouraging market indicators, has prompted Rightmove to revise its year-end price forecast. Rightmove now anticipates a 1% increase. They expect modest price rises in autumn, followed by the typical seasonal price declines towards the year’s end. Although some uncertainties remain – such as October’s Budget, the timing of a potential second bank rate cut, and the US economic situation – the outlook for the rest of the year appears positive. Sales agreements between buyers and sellers are tracking 16% higher than last year, and the number of new sellers entering the market is up by 5% from the same period last year.
Concerns
Homebuyers could face an extra £2,500 in Stamp Duty costs as the temporary increase in the exemption threshold is set to expire in March. This hike had previously raised the nil-rate threshold for first-time buyers from £300,000 to £450,000 and for movers from £125,000 to £250,000 under former Prime Minister Liz Truss’s administration.
According to The Times, Chancellor Rachel Reeves will not continue the scheme, resulting in a return to the original Stamp Duty thresholds. The move is anticipated to generate around £1.8 billion by 2030 and is expected to be confirmed in the 30 October Budget.
Tim Bannister of Rightmove commented: "The news that 'nil rate' and first-time buyer stamp duty thresholds will revert to their previous levels by March 2025 will undoubtedly be seen as an unwelcome extra expense by many buyers planning to move that year, as well as those currently in the process."
He continued: "With the nil-rate threshold for home-movers set to decrease from £250,000 to £125,000, purchasers of properties above this value could see up to £2,500 in additional stamp duty land tax. Similarly, the threshold for first-time buyers is likely to fall from £425,000 to £300,000. Consequently, a first-time buyer purchasing a property at the average UK price of £370,759 will incur £3,538 in stamp duty from March 2025, as opposed to none at present."
Bannister predicts a rush to complete property transactions before the Stamp Duty changes take effect, as buyers aim to sidestep the additional costs, resulting in a busier period over Christmas and New Year for the housing market. He added, "The average time to complete a sale from the moment an offer is accepted is currently 152 days. Coincidentally, this is the exact number of days between the Budget on 30 October 2024 and the proposed stamp duty deadline on 31 March 2025. Therefore, buyers who agree to a purchase after the Budget may not complete in time unless all parties involved in the transaction collaborate to expedite the process."
Planning to move
If you’re considering a new Thanet home, please contact our team at Oakwood homes on 01843 222701.