The housing market is going through “a larger-than-normal” slowdown after the Budget and ahead of Christmas, the latest Rightmove HPI shows.
And the average price of a property coming to the market dropped 1.4%, or £5,366, this month to £366,592.
Rightmove says “last month’s pre-Budget jitters have turned into post-Budget disappointment, creating new challenges for the housing market”.
Budget dampener
“However, despite the dampener of the Budget, the big picture of market activity remains strong when compared with last year,” the portal insists.
The number of sales agreed is now 26% ahead of the same period in 2023, and the number of new sellers coming to market is 6% ahead of the same period a year ago.
A second cut in the bank base rate to 4.75% is having a positive effect on the market, and optimism for lower mortgage rates next year has led to Rightmove forecasting a 4% increase in average new seller asking prices next year.
There’s been a lot of news to digest for home-movers over the last few weeks.”
Tim Bannister, Director of Property Science at Rightmove, says: “There’s been a lot of news to digest for home-movers over the last few weeks, and it appears that the market may still be chewing it over.
“We had been seeing a drop-off in buyer demand, both in the lead-up to the Budget and in its immediate aftermath, as it was confirmed that there will be an increase to stamp duty charges for most home-movers and second-home buyers, and some first-time buyers.
Optimism boost
“However, a second Bank Rate cut and a boost of optimism regarding 2025 appear to have reversed this trend at least temporarily,” he says.
“Zooming out of these short-term trends, the big picture of market activity remains positive when compared to the quieter market at this time last year.”
Industry reaction
Nathan Emerson, CEO at Propertymark, says: “The Bank of England’s recent cuts to interest rates are likely to spur on more movement and further stimulate the market.
“With many buyers in England and Northern Ireland looking to move quickly before the Stamp Duty rises in April, we could see more people willing to accept heavier negotiations than normal, which could result in a small dip in the average house price,” he says.
“With the potential of a rise in the volume of transactions on the horizon, we would anticipate a spiked shift towards the improvement of the overall health of the economy.”
Kevin Shaw, National Sales Managing Director at Leaders Romans Group, says: “Since the Budget and subsequent interest rate drop, there has been no obvious spike in sales numbers, although there has been a slight uptick in demand.
“Decisions are being made now before the build-up to Christmas, as buyers are more likely to get price flexibility from sellers now rather than in the New Year,” he says.
“This presents a good opportunity to negotiate, as there will certainly be more people looking in January after the Christmas break and usual surge in enquiries on Boxing Day. There is some uncertainty following hikes in National Insurance and the minimum wage.”
Alastair Cochrane, Group Sales & Operations Director at Stirling Ackroyd, says: “Committed buyers are still offering and purchasing, and for some sellers who have a property that could attract a first-time buyer, the window of opportunity is closing for them to use the stamp duty relief, so now would be a good time to take action,” he says.
“For investors, the increased stamp duty does present an initial barrier, and maybe those considering an investment property will recalibrate offer prices to take into account additional costs. Overall yields have increased with rising rents, which should give investors some comfort despite increases in stamp duty.”
Alex Caddy, Manager at Clarkes Estate and Letting Agency, says: “We have seen a few flashes of greater market activity, largely stemming from first time buyers, however overall, we’re seeing activity tail off before Christmas.
“This time of year does see some sellers taking a break from the market which gives an opportunity for those who persevere, as the amount of choice decreases for those active buyers,” he says.
“We have two camps of sellers at the moment – those without time pressure are holding fast with their asking prices, while others who reduce their price to attract a buyer more swiftly have more luck once they find a competitive price point.
“There are still many sellers planning their moves who are out looking despite not yet having a buyer themselves. There is certainly optimism that as first-time buyer activity picks up, this will create the much-needed knock-on effect to kick-start next year.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Although these are asking, rather than selling, prices, this month’s larger-than-usual drop confirms what we are seeing in our offices.
“There is more demand and sales agreed are up too, but the increase in listings means buyers are spoilt for choice so sellers must be competitive if they want to stand out from the crowd.
“The Budget did not do the housing market any favours and may even extend the cautious tone as measures announced will probably mean mortgage rates remain higher for longer,” he says.
“On a slightly more positive note, first-time buyers are trying to snap up properties at better prices which investors decide against due to higher stamp duty, before the lower rates which apply to them disappear next April.”
Tomer Aboody, Director at MT Finance, says: “More activity is leading to slower growth in asking prices, as buyers are in a stronger position with more stock available for sale.
“We are seeing some further push forward from the market with regard to mortgage rates, helped by the latest bank rate reduction, although further cuts might be slower in coming.
“While the Budget is now done, the market has yet to properly respond but in the short term as lenders continue to provide more affordable mortgages, we should continue to see the uplift in the market. As we stand now, if you’re looking to sell, price sensibly and attractively, chances are the buyer will be there.”