After days of preemptive warnings, Jeremy Hunt’s autumn statement didn’t hold many surprises. But coming on the heels of last month’s mini-budget chaos, predictability and stability seem to be the order of the day.
One of the few policies that remain in Mr Hunt's fiscal plan from his predecessor Kwasi Kwarteng is the rise in the stamp duty threshold to double the previous rate. However, Mr Hunt confirmed the cuts will be phased out from March 2025, “creating an incentive to support the housing market and the jobs associated with it.”
For those hoping to get on the property ladder, there wasn’t much more to take away from today's budget. Still, Mr Hunt acknowledged concerns over a slowing housing market which were later underlined in a follow-up statement by the Office for Budget Responsibility (OBR) predicting a 9 per cent drop in house prices over the next two years, driven primarily by the increase in mortgage rates and the economic recession that the UK is now officially in.
Read More Everything Chancellor Jeremy Hunt announced in his autumn statement
The OBR anticipates average mortgage interest rates will peak at 5 per cent toward the end of 2024 before dropping to 4.6 per cent by the end of 2027. The OBR said: “As the economy recovers, house prices will rise slightly faster than nominal incomes from 2025, at around 2.6% a year, and the house-price-to-earnings ratio settles at around 7%, somewhat lower than the ratio of 7.3% in our March forecast.”
They also added: “There is significant uncertainty over this forecast given the sensitivity of house prices to mortgage rates and the recent volatility in the bond yields that drive pricing in the mortgage market.”
We spoke to estate agents around Bristol about what this forecast and the Autumn statement might mean for the local market, whether you’re a buyer or a seller. On the OBR’s prediction James Brown, sales manager at CJ Hole in Clifton, said: “It’s probably more realistic than some of the figures that have been thrown around from 10% to 20%."
But Mr Brown, like everyone we spoke to, wasn’t shocked by the news and added: “I would say below that 10% is probably what people were expecting in the industry, and it’s a nationwide figure, but in certain areas, Bristol being one, you would expect it would normally outperform the national average. So hopefully - there’s not too much of a drastic drop for owners, but also it can help give buyers more confidence.”
Regarding the changes to stamp duty, the repose was generally muted. Mr Brown felt if the end date was earlier, it might have had more of an immediate impact. He said: “Every time we’ve seen previously stamp duty deadlines put in place, there's been a bit of an increase around the deadlines, but those changes were giving a larger capital benefit than these ones, so having it phased out until 2025 probably won’t have much of an impact.
“Obviously, that’s a shame that's gone because that help was definitely wanted and needed and appreciated by every type of buyer. But I don’t think it will have a huge impact on focusing the market in the short term."
Dominic Wyatt, a Sales negotiator for Bristol Property Centre, agreed with that sentiment telling Bristol Live that it could boost the market as some people may want to get in while it’s still being offered, but only in a minor way.
Meanwhile, Mark Leese, a director at Leese and Nagle, also felt it wasn't particularly significant. He said: “The stamp duty holiday hasn’t really had much of an impact on the market by way of comparison to the interest rate rises going up steeply and quickly. It’s proved to be a bit of a shock to the market, and largely, it’s precluding people in the month from taking out large amounts of additional finance.”
He’s noticed dips in activity around the recent budget announcements, over and above the slowdown, he would expect in the winter months but was pragmatic about the prospect of falling house prices. Mr Leese said: “Bristol’s got a strong economy, we haven’t got enough properties, we’re a growing city, we will see our market remain relatively resilient to it, but at the moment, the mortgage rate has put a temporary hiatus in the market.
“That could mean the prices drop, but realistically they’ve gone up 20% in the last two years, and that’s almost too quickly, and if it drops back, that will make it more affordable for first-time buyers and families wanting to purchase and stay at a stable level. So we’ll have correction now, and then next year, we’ll probably find that mortgage rates will level out, and the market will find its way again and crack on.”
Generally, the content of the budget was well-received, and Mr Wyatt told us he felt it was “a step in the right direction”. He was also glad to see support for those on benefits preventing rent arrears but was disappointed there wasn’t targeted help for those getting started on the property ladder. Mr Wyatt said: “We would have liked to have seen something to help first-time buyers struggling to raise deposits, but unfortunately, it wasn’t to be at this point. We’re in a difficult economic time, and there’s no real easy way to address it.”
Elsewhere Jonathan Rolande, spokesman for the National Association of Housing Buyers, also noted, "Nothing announced today will help first-time buyers get a foot on the ladder.”
On the subject of what the Autumn statement was lacking, Mr Brown also suggested that many people would have liked to have seen plans for more houses being built. He told Bristol Live: “We need more property to sell in and around Bristol given the demand still outstrips supply on a pretty high ratio.”
But similarly, he was hopeful the message of the budget and the supporting statement from the OBR would help provide more clarity and certainty around the housing market. He said:” The ship just feels like it's being steadied; even though it's still tough, it’s easier to understand.”
Mr Leese was also optimistic and said:“ I think it's a sensible budget for the housing market, it's realistic from where we are with the economy, and I think it will help to bring some stability over the next 3-6 month period.”
He also pointed out that some of the changes occurring in the market were perhaps overdue: “I think people have been scared, and it causes people naturally to assess where they are, but it’s not necessarily a bad thing for the market to have a slight correction.
“In the UK, we’re overly obsessed with house prices; we shouldn't look at it like that; we should look at it as somewhere that we’re going to live, a home. I’d prefer it if house prices stayed more stable, and then we had a more stable market in which people were moving around in as and when they could.”
Although critical of the lack of focus on the housing market in the statement today, Mr Rolande also acknowledged some positives saying: ”The decision to cut Capital Gains allowances is a good move, and taxing unearned income is the least painful way to generate money for the treasury."
He continued: “The decision to reduce the amount Housing Associations will be able to increase rent by will be popular, and it may lead to pressure on the private sector to follow suit with rent control, although I suspect this would be some time away. One chink of light is that if the money markets respond well, we could see some of the pain of tax rises offset by cheaper mortgages as the pressure on longer terms loans eases.”
Overall, Mr Rolande noted that the chancellor hadn't announced any punitive actions. But he felt that: “Most importantly, we haven’t seen a set of measures which risk causing the chaos of the botched mini-Budget which caused so much damage to the property sector. This is damage we are still reeling from.”
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