Autumn Statement: A cautious sigh of relief for the housing market

The housing market was on tenterhooks early in the week. I’m happy to say that the Chancellor’s Autumn Statement is likely to bring a sense of calm to the market.

The news from Downing Street has been pretty grim for the last few months.

But, I broadly welcome the news for the housing market following the Chancellor’s announcement in the House of Commons earlier today.

The outlook for the property market could have been much worse when considering the broader economic forecast and the measures that the Government may have been forced to take to settle things down following the disastrous experiment inflicted on our economy by Truss and Kwarteng.

The Office for Budget Responsibility (OBR) forecasts house prices to be up by 10.7% by the end of this year but expects them to fall in 2023 and 2024 by around 9% over the two years. Beyond that, they suggest prices will rise again in 2025 and increase still further in 2026/7.

This suggests a more balanced market than we have seen over the past two years, which many will welcome, although factors beyond economic forecasting could still buck the trend.

These figures tend to be calculated against stretched household incomes, and the availability of competitive mortgage interest rates whilst the housing market is subject to less certain factors which cannot be predicted.

Supply levels have been restricted in recent years, and working-from-home freedoms have been a significant driver since the pandemic. Both could continue to prevail, upsetting predictions.

The OBR does not mention previously announced Stamp Duty savings, which the Chancellor announced he will ‘sunset’ and will end in 2025. We could see another rush of buyers eager to secure lower moving costs and beat another somewhat artificial deadline.

The Chancellor acknowledged the importance of the property market as an economic multiplier, suggesting that additional support could be on the cards in the future.

There was bad news for those planning to sell second homes with a reduction in Capital Gains Tax (CGT) allowances dropping from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024. But considering recent house price inflation, capital appreciation in recent years might counter the extra tax payable.

Many moving home will welcome a more even balance of supply and demand. With the days of soaring house prices behind us, I predict that we will see calmer trading conditions for a few years, which may suit both buyers and sellers.

And so to the ‘sixty-four-dollar’ question – what will house prices do in 2023?

Several organisations much larger than Hobbs Parker, with expensive research departments, think house prices will likely fall by 8% to 12% in 2023.

Whilst this may be the case for the country as a whole, I think it’s essential to consider local factors and the merits of an individual property.

Demand for good properties in good locations remains strong. Many people buying properties through Hobbs Parker are in a financially secure position and less impacted by mortgage rates and inflationary pressures.

For many, a moderate ‘correction’ in property prices is helpful as it reduces the amount of borrowing required.

I’ve always believed that if the property and time are right for you, and your planned move is affordable, then the vagaries of the property market, which are all but impossible to predict with any substantial degree of certainty, should not hold you back.

Buying a house is a medium to long-term investment, and I can’t remember many times in my career when buying a property has proved to have been a poor decision five years on.


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