The property market enjoyed a strong Starmer start. But Budget uncertainty means recent weeks have felt more like a Reeves retreat.
The annual pace of price growth accelerated dramatically during the new Government’s first full month in office. By the end of August, average prices across the UK were up 2.8% compared to the same time last year, and the prices paid rose 1.5% in August alone.
The Prime Minister can’t take sole credit for this impressive return to form of course. While the sense of stability brought by July’s decisive election result clearly helped the market settle, the Bank of England played its part too. Its decision to cut interest rates at the start of August triggered a frenzy of competition among mortgage lenders, who cut the cost of borrowing to win business – and in turn allowed buyers to push up what they can afford.
But in recent weeks price growth has slipped back into neutral in many areas. A rush of sellers putting their home on the market means that many buyers find themselves spoilt for choice and able to negotiate hard on the price they pay. Mortgage rates have stopped falling too, even though today’s welcome fall in consumer inflation means further rate cuts could be on the cards for November.
The slowdown in activity is most acute at the top end of the market, where many sales are discretionary. Wealthy buyers have been spooked by reports of painful tax rises to come in this month’s Budget, and some prospective sellers have gone into an early winter hibernation and decided to hold off on listing their home for sale until the spring.
While today’s official data reveals that August’s property market was heating up nicely, things have cooled since then. Impressive and welcome though these numbers are, they may be more blip than boom.
Leave a Comment