Friday’s mini budget was thought to be the spark of another round in property price inflation. Estate agents and their client sellers were on phones within just hours after hearing about this new tax break, tying up all deals that couldn’t quite be done before now due to exchequer funding being handed out as “free” money for buyers suddenly had a bit more to spend.
The international markets had the weekend to consider Budget pledges and listen in on Mr Kwarteng’s media interviews promising even more giveaways down the line. And they didn’t like it – Monday saw pound take a bruising as rates rose, with an interest rate hike possible. Long-term borrowing costs went up because Britain looks less safe than before.
Headlines about banks pulling mortgages all felt very familiar to those old enough to remember the 2008 banking crisis. The hours, days and weeks ahead will be crucial when trying to work out just where the property market is headed.
The housing crisis has reached a boiling point with frankly almost nobody happy with the current state it is in. Tenants are paying more and their landlords look set to as well, thanks to increased mortgage rates – not to mention government intervention that has added to their woes.
Buyers will be paying more each month because of higher rates and the stamp duty break already seems like an irrelevance. Even sellers are fearful of price drops or worse still, an absence of buyers.
Buyers are waiting for events to unfold, even if they’re mid-purchase and many will have to sit tight until things calm down or prices drop before continuing with their purchase plans; sellers face an uncertain future where all options may be on the table including pulling out completely or discounting homes in order attract buyers who can afford them at current rates.
But for now we need to remain calm and await events. Often things are not as bad as we fear – nor the outcome as good as we hoped!