Confidence and affordability pressures are still holding back property market activity
Confidence and affordability pressures are still holding back property market activity, say leading audit, tax and business advisory firm, Blick Rothenberg.
Mark Cunningham, a partner at the firm, said: “HMRC’s figures for UK residential transactions in September show that confidence and affordability pressures are continuing to hold back activity, with the property market being particularly subdued before the Autumn Budget. Seasonally adjusted residential transactions were down 4% year on year to 94,800 and were also marginally lower than in August.”
He added: “The months to come will show us how the market responds to the chancellor’s announcements, but the biggest influence on transactions over the next year is likely to be the direction of interest rates. With further rate rises expected, higher borrowing costs will put renewed pressure on affordability and confidence, making an already challenging market even more difficult. The expected rises are being driven by global factors beyond the housing market, but homeowners and buyers will feel this through higher mortgage costs.”
Mark said: “The further rise in tax on property income to 24%, 44% and 49% announced in the Budget will be the final straw for many landlords, and lead some to sell up. This should increase the supply of homes coming to market and may increase transaction numbers in the coming months, but that should not be mistaken for a healthier property market driven by real growth and buyer demand.”
He added: “The Your First Home scheme should help some buyers overcome the deposit barrier and support transactions and, over time, some additional new build delivery. However, the effect will not be immediate and, given the costs of participation, it remains to be seen how significant its impact will ultimately be.”