UK housing market faces ‘considerable upheaval’ as sellers lose confidence
Estate agents have warned that a turbulent global economy and changes to stamp duty have caused upheaval in the housing market after prices flatlined in June.
UK house prices were stagnant in June, according to the latest data from Halifax, after a 0.3 per cent drop from April to May.
“Today’s news suggests that house prices have dropped quarterly and that there has been no monthly increase in house prices, which demonstrates that the UK housing market has faced considerable upheaval,” Nathan Emerson, CEO of Propertymark, said.
Emerson attributed the turbulence to an uncertain global economy, as well as stamp duty thresholds in England and Northern Ireland increasing from the beginning of April.
Jonathan Hopper, CEO of Garrington Property Finders, added that “the post-Stamp Duty lull in demand has collided with a deluge of supply… in some areas, the flood of supply seems almost biblical.”
“On the ground, we are witnessing a clear behavioural shift. Many sellers are not financially distressed, but they are fatigued – tired of waiting for perfect conditions, and now motivated to act.
“However, they are doing so in a landscape where buyers remain cautious amid sticky interest rates and lingering political and economic questions,” Hopper said.
Autumn tax increases dampen rate cut optimism
The liklehood of tax increases in the Autumn shot up last week when the government was forced to U-turn on its welfare bill, opening up a £5bn hole in the public finances.
In fact, the Institute for Fiscal Studies (IFS) has warned that Reeves may need as much as £30bn to cover the welfare U-turn, the climbdown on winter fuel payments and lower-than-expected GDP forecasts.
All this makes it tax rises all but set: “I don’t really think there is [another way of doing it],” outgoing IFS boss Paul Johnson told the BBC.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said that worries about tax rises has reduced optimism with regard to further rate cuts this year.
“The net result is slower, longer transactions and softening prices so sellers, particularly of higher-value homes, need to recognise market sensitivities if they want to stand out from the crowd,” he said.