Will the Autumn Budget derail any Cheadle housing market recovery?

As we approach the upcoming Budget announcement on Wednesday 30th October, there are all sorts of rumours, leaks and media speculation as to what Chancellor Rachel Reeves might do. Many are worrying that any slight recovery in the Cheadle housing market will be stopped in its tracks with the suggested proposals. What is clear is many prospective buyers are holding off making any decisions to purchase until the governments economic strategy is set out. So, we have decided to take a look at what could be in the Budget and what impact it might have on the property market for 2025.

August Rightmove's House Price Index

According to Rightmove's latest House Price Index, the average price of properties listed for sale has experienced a seasonal decline of 1.5% this month (£5,708), bringing the figure to £367,785. This trend of reduced asking prices in September has been consistent for the past 18 years, with this month’s decrease aligning with the long-term average. The school summer holidays typically distract potential buyers, causing many to delay their home-moving plans in favour of enjoying time off or travelling with family. Those who list their homes during this quieter period often have a more urgent need to sell and thus price their properties more competitively.

Interestingly, this year’s summer sellers might encounter a renewed sense of buyer interest, absent during last year’s peak mortgage rates. As predicted in Rightmove’s July report, the Bank of England’s first rate cut in four years at the beginning of the month has spurred a drop in mortgage rates, significantly boosting buyer demand. These favourable conditions are laying the groundwork for a buoyant autumn market. In light of the increased market activity following the bank rate cut, Rightmove has adjusted its forecast for 2024. Previously predicting a 1% decline in new seller asking prices for the entire year, the revised outlook now anticipates a 1% increase. This adjustment reflects the improved market sentiment and the expected continuation of positive trends.

What are the positives?

Since the bank rate cut on 1 August, the number of potential buyers contacting estate agents to view homes for sale has increased by 19% compared to the same period last year. This period last year was notably subdued, as the market was grappling with the effects of unexpectedly high inflation and peak mortgage interest rates. However, the current improvement in buyer demand, up from +11% in July, highlights the immediate and significant impact of the first bank rate cut since 2020. Agents note that increased political stability and an improving economic outlook are also contributing to heightened buyer interest.

The positive influence of the bank rate cut, coupled with other encouraging market indicators, has prompted Rightmove to revise its year-end price forecast. Rightmove now anticipates a 1% increase. They expect modest price rises in autumn, followed by the typical seasonal price declines towards the year’s end. Although some uncertainties remain – such as October’s Budget, the timing of a potential second bank rate cut, and the US economic situation – the outlook for the rest of the year appears positive. Sales agreements between buyers and sellers are tracking 16% higher than last year, and the number of new sellers entering the market is up by 5% from the same period last year.

A big push for affordable housing

At the heart of the Governments pre-election pledge was their commitment to tackle the affordable housing crisis head on. The UK has faced an affordable home shortage for a number of years, and it is a issue ignored by successive governments, leaving many prospective buyers priced out of the market. The government have promised significant investment in this sector of the property market. The Prime Minister has committed to expanding the Help to Buy scheme and introducing new incentives for developers to prioritise afford housing projects.

This could mean a surge of activity at the lower end of the market and help more young people onto the property ladder, potentially shifting the market dynamics of recent years.

Greener Homes but more regulation – a double-edged sword?

Another key component of the Government’s housing strategy is a push towards greener homes. The introduction of stricter energy efficiency standards for new builds aims to reduce the UK’s carbon footprint and make homes cheaper to run in the long term. This could force a change in buyer preferences, with a significant shift towards properties with more eco-friendly standards.

The flip side could also mean higher costs for developers, which could be passed on to the consumer and longer construction timelines as they adjust to any new regulations. For older properties which don’t meet the new standards, there could be significant cost to the sellers or lower valuations as lenders and surveyors also adjust to any changes.

Stamp duty reforms – most unwelcome!

One of the most controversial and unpopular elements of the Autumn Budget is the rumoured reform of stamp duty. As the country waits for the Chancellor of the Exchequer Rachel Reeves to deliver the first Labour budget since 2010 - Stamp Duty has once again become a topic of conversation.

What is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is a tax payable if you buy a property or land over £250,000.00 in England and Northern Ireland. The threshold is higher for first time buyers. Different rules also apply to purchasers who already own land and purchasers who are not resident in the UK.

Liz Truss and the “mini” budget

In September 2022 Kwasi Kwarteng delivered the now infamous mini budget on behalf of the Liz Truss’s short-lived Government. One lasting change of the mini budget was a temporary raising of the Stamp Duty Land Tax thresholds to support the housing market. It aimed to lower the upfront cost of moving homes and provide support for those moving home and in particular first time buyers who were struggling to get onto the housing ladder.

To achieve this, the former government made the following changes:

• The threshold for the standard rater of Stamp Duty Land Tax was raised from £125,000.00 to £250,000.00.

• First time Buyers relief was amended to the threshold from which a first-time buyer would pay Stamp Duty Land Tax which was increased to £425,000 from £300,000.

• The maximum purchase price for which First-Time Buyers Relief can be claimed was also raised to £625,000 and will return to the previous level of £500,000.

These changes were intended to be temporary and are due to expire after 31 March 2025. After this date the thresholds are due to return to their previous level.

Will the budget extend the current deadline?

It is not yet known whether the new Labour Government will extend the current deadline or even make the temporary increase in the Stamp Duty Land Tax thresholds permanent. However, given that Chancellor’s repeated comments on the needs to balance the books hopes of an extension may be optimistic.

How will this affect buyers?

If the Budget does not alter the planned lowering of the Stamp Duty Land Tax thresholds buyers of residential property priced over £125,000.00 will have until 31 March 2025 to complete their purchase or face a higher tax bill. As with previous Stamp Duty Holidays the lowering of the threshold is likely to cause a temporary increase in demand for conveyancing services which could in turn cause delays. Given that the average purchase will already take approximately four months from receipt of the draft contract papers from the seller’s solicitor potential buyers will need to move quickly if they wish to complete prior to the deadline.

Tim Bannister of Rightmove commented: "The news that 'nil rate' and first-time buyer stamp duty thresholds will potentially revert to their previous levels by March 2025 will undoubtedly be seen as an unwelcome extra expense by many buyers planning to move that year, as well as those currently in the process."

He continued: "With the nil-rate threshold for home-movers set to decrease from £250,000 to £125,000, purchasers of properties above this value could see up to £2,500 in additional stamp duty land tax. Similarly, the threshold for first-time buyers is likely to fall from £425,000 to £300,000. Consequently, a first-time buyer purchasing a property at the average UK price of £370,759 will incur £3,538 in stamp duty from March 2025, as opposed to none at present."

Bannister predicts a rush to complete property transactions before the Stamp Duty changes take effect, as buyers aim to sidestep the additional costs, resulting in a busier period over Christmas and New Year for the housing market. He added, "The average time to complete a sale from the moment an offer is accepted is currently 152 days. Coincidentally, this is the exact number of days between the Budget on 30 October 2024 and the proposed stamp duty deadline on 31 March 2025.

Planning to move

If you are considering a move now or in the New Year and want to know how the value of your home has changed in 2025 or the implicants of the Budget on the local Cheadle Property Market, please call Maurice or Patrick on 0161 428 3663, e-mail sales@mkiea.co.uk or you can book an appointment online via our website Book a Free sales and marketing consultation - alternatively, you can always pop into our office on Cheadle High Street for an informal chat.