Are house prices recovering after the mini-budget?
The September mini-budget was one of the biggest announcements we’ve been following over the last few months. As financial markets reacted to the unfunded tax-cutting measures proposed by Liz Truss and her Chancellor Kwasi Kwarteng, the property market braced for difficult times ahead.
Fortunately, the new Chancellor Jeremy Hunt – appointed as Liz Truss and her Chancellor swiftly departed – was able to bring some calm to the economic maelstrom. The markets have largely settled down, but some people fear that London property may have suffered as a result of the economic turmoil.
With 2023 fast approaching, we ask, ‘Has the mini budget negatively affected London’s housing market?’
In this mini budget summary we look at the effect of property market changes, both before and after the mini budget.
What happened in the lead-up to the mini-budget?
Global factors, such as supply issues linked to the pandemic and the war in Ukraine, had begun to put pressure on mortgages even before the mini-budget was announced. In an effort to fight inflation, the Bank of England began raising interest rates.
As a result, homeowners renewing their mortgages and first time buyers looking for a new mortgage found deals were becoming more expensive.
The mini-budget announcement prompted further, faster rises in the cost of mortgages. This raised concerns that property chains would break as buyers withdrew from house purchases. However, Rightmove has reported that the number of cancelled sales following the mini-budget was far from unusual. Figures for the first two weeks of October were comparable to the pre-Covid housing market of 2019.
Has the mini budget impacted the housing market in London?
The London property market is looking stable as we move into 2023. House prices have remained buoyant due to a shortage of housing stock, and that is one of the reasons why property values in the capital remained high during the economic shocks of the autumn.
Interest rates are currently predicted to rise above 4 per cent in early 2023, possibly rising to around 4.8 - 5 per cent by July. After that, rates are expected to fall gradually. Many homeowners are taking on tracker mortgages in anticipation of falling monthly costs. These mortgages follow the Bank of England’s base rate: as soon as interest rates begin to come down, monthly payments will also drop.
London property is still looking surprisingly healthy, despite the rise in mortgage rates. If you are planning to move next year, we would advise you to seek advice on the best available deals from an experienced mortgage broker.
Daniel Cobb is an independent, family run estate agent, and we take pride in offering a truly individual service to our clients. We are always happy to advise you on all aspects of your property purchase, so why not call us to talk through your plans?
