News & insights
What the Spring Statement means for the housing market
Rishi Sunak, Chancellor of the Exchequer,
delivered his Spring Statement to Parliament last month (March) in what has
been described as a ‘mini-budget’. While there were few measures directly related
to the property market, he did offer some concessions that should benefit many homeowners
and renters. These included:
·
tax cuts for green home
improvements
·
reduced fuel duty
·
the Household Support Fund for
local councils doubled to £1 billion
·
the National Insurance (NI)
threshold raised by £3,000 to £12,750
·
basic rate of income tax cut
from 20 per cent to 19 per cent by 2024
However, with inflation and the cost of
living soaring, as well as higher interest rates, some have suggested he didn’t
go far enough. Figures from the Office
for Budget Responsibility released alongside Sunak’s announcement showed there
would be a 2.2 per cent fall in real disposable incomes over the next year, and
inflation could reach as high as 8.7 per cent by the end of the year.
Iain McKenzie, CEO of The Guild of Property
Professionals, said: ‘The financial challenges that people face will
always trickle down to homeowners, those looking to get on the property
ladder and those seeking affordable properties to rent.’
He continued: ‘While energy price rises
will increase the cost of powering our homes, the measures taken to cut VAT on
environmentally friendly power sources and energy-saving insulation will give
homeowners some relief going forward. Regardless of these initiatives, average
annual inflation of 7.4% will hit people hard and reduce the affordability of
mortgage and rent payments.’
Despite the troubled economic climate, it’s
heartening to see that the housing market has shown remarkable resilience so
far this year. High demand from buyers has remained steady, driven in part by
people continuing to reassess their lifestyles post-pandemic. Prices have
continued to increase, helped by a shortage of housing stock. According to
Zoopla, the stock of UK homes available to buy is 42 per cent below the UK’s
five-year average. And last month (March) Rightmove confirmed the average price
of a UK home reached a new record high of over £350,000.
However, some analysts predict the pressure
on personal finances, combined with the increased cost of borrowing, could slow
house price growth and demand. First time buyers in particular are likely to be
hardest hit by the cost of living crisis. Zoopla forecast house prices will end
the year just three per cent higher than they started, significantly down on
the growth of 7.4 per cent recorded in 2021.
While the outlook for the property market
may be uncertain, we would like to reassure customers that Thames Water Property Searches
commitment to customer service remains the same.