Housing market slump ‘compounded’ by Budget fears
The housing market suffered from a six-month low in demand amid caution from consumers ahead of the upcoming Budget, a survey has shown.
Buyer demand, sales activity and new instructions fell into negative territory over October in a monthly survey conducted by the Royal Institution of Chartered Surveyors (Rics).
Property professionals blamed fears around the upcoming Budget for a marked slump in demand as households feared tax burdens could rise again.
Rics head of market research and analysis Tarrant Parsons said there was low confidence across the UK, exposing the “weakness” of the housing market last month.
“Ongoing uncertainty surrounding potential measures in the upcoming Budget are thought to be compounding the cautious mood among both buyers and sellers, while above target inflation and rising unemployment are also a negative for the market,” Parsons said.
“Greater clarity over housing taxation policy may help stabilise sentiment, but if the measures announced add further pressure to activity, they risk deepening the current slowdown.”
The survey found that a net balance of 24 per cent of professionals saw a fall in new buyer enquiries.
The reading was the lowest since April this year when new stamp duty measures came into effect.
Most surveyors also recorded a fall in agreed sales while new sale instructions fell on the month in the worst reading since 2021.
House prices are also expected to drop slightly in the next three months, with London and other areas in the South East set to suffer the most from a fall in valuations.
The reading for the lettings market also fell to the worst reading since 2020.
Housing experts criticise stamp duty
The latest set of data on the difficult market for both house buyers and sellers may sharpen minds across the Treasury ahead of a crucial Budget.
Appearing before MPs on Wednesday afternoon, influential economists and campaigners hit out at the stamp duty.
TV presenter Kirstie Allsopp said the government should abolish the stamp duty, a pledge which the Tories have made for primary residences.
“What I see is young people buying more expensive houses, really, than they can afford because they know they can’t pay stamp duty twice,” Allsopp told MPs on the Treasury Committee.
“The other thing I’m seeing a lot of is people altering two and three-bed houses rather than moving, because the cost of moving is so high.
“I think we’re actually damaging our first-time buyer housing stock because of stamp duty.”
Richard Donnell, executive director at Zoopla, also took aim at the stamp duty.
“About 40 per cent of first-time buyers looking to buy property through our website would pay stamp duty on what they’re looking to buy, and that’s up to nearly 80 per cent of first-time buyers in London.
“It’s a tax that leans really heavily on London and the South East.
“I think what concerns me most, if you look at sales for over half-a-million, it’s 70 per cent of the receipts. Sales over a million is 40 per cent of the receipts.”