House prices fall amid pre-Budget jitters
House prices fell last month, a leading price index has suggested, a warning that house buyers and sellers are nervy ahead of a potential tax raid on property.
Halifax’s house price index suggested house prices dropped by 0.3 per cent on the month, putting the average property cost at £298,184.
The annual rate of growth was just 1.3 per cent, which was also lower than the two per cent seen in the previous month.
In London, prices edged up by 0.6 per cent as the property value reached £543,497, reflecting the widening gap between property prices in London versus the rest of the country.
It has been widely reported that Chancellor Rachel Reeves is considering targeting landlords and home owners at the next Budget.
Measures could include applying national insurance to rental income and new capital gain tax charges for more expensive homes.
Discussions around making the stamp duty a payment made through installments rather than a lump sum at the point of purchase have also taken place, Morning Wire understands.
Capital Economics’ Ashley Webb said the softer data compared to Nationwide’s 0.5 per cent monthly rise comes “against a backdrop of weak employment and still high mortgage rates”.
“Tax rises in the Budget would dent real household disposable incomes and weigh on the housing market next year,” Webb said.
Tom Bill, head of UK residential research at Knight Frank, said: “Sellers are getting the message that house prices are under pressure due to higher levels of supply and a creeping mood of caution as November’s Budget approaches.
“Stable mortgage rates have supported demand but we believe prices will continue to dip modestly before ending the year broadly flat.”
House prices fall for first time in five months
The decline in September was the first seen since May and could indicate that the Bank of England’s hesitancy around cutting interest rates is beginning to rub off on prospective buyers.
The Monetary Policy Committee (MPC)’s next meeting will come early next month, with hopes of a cut rapidly fading due to high inflation levels.
The Bank and some forecasters believe price growth could hit four per cent in September in new data set to be released this month.
It would likely deter MPC members from voting for a cut given inflation in the UK has become harder to battle against than other countries.
The OECD said the UK was set to have the highest inflation out of any country in the G7.
The absence of an interest rate cut is set to keep mortgage rates higher than house buyers may have hoped.