How will the autumn statement affect the housing market?

Jeremy Hunt’s autumn statement announcement aims to bring stability to a tumultuous market.

While there has been nothing explicit in the autumn statement that talks about mortgage rates, every move the government has made is part of an attempt to stabilise the economy, and mortgages play a huge part in that. So how will these changes affect the housing market?

1. Stamp duty cuts remain

The stamp duty cuts brought in by Kwasi Kwarteng in September 2022 remain the same, and will do so until 31st March 2025. This serves as one of the few mini-budget measures that hasn’t been axed, and given predictions that the market will slow over the next two years, it’s hoped that these cuts will provide some stability.

The new thresholds after which stamp duty must be paid are1:
After the first £250,000 for those who have previously purchased a property (previously £125,00)
First time buyers can pay up to £425,000 on a property without paying stamp duty (currently £300,000)
First time buyers purchasing homes costing more than £425,000 will be entitled to 5% relief up to £625,000 (currently up to £500,000)

This means that if you’re purchasing a home worth £600,000, you’ll now pay £8,750 in stamp duty compared to the previous sum of £17,500.2

2. Council tax increases

From April 2023, local authorities in England will have the flexibility to increase council tax to 3% per year without a referendum and an additional 2% for areas with social care responsibilities.3 These increases will provide councils with greater flexibility to set levels based on the need, resources and priorities of their area. It also means that the average council tax bill could jump above £2,000 a year - a potential increase of £98 per year for a Band D household.4

3. The effect on the housing market

Despite efforts in the statement address of a potential recession5, there’s a high probability that there will be a decline in disposable income over the next few years. We could see a drop in housing prices because of this, and the OBR confirms that housing prices will probably fall by around 9% between now and the third quarter of 20246.

Additionally, the new time limit on stamp duty rules could spark a sense of urgency for those aiming to get on the housing ladder in the next few years. However, Jeremy Hunt noted that “the OBR (Office for Budget Responsibility) expects housing activity to slow over the next two years.”3

Hunt’s aim with this statement is to promote stability, and inflation is the enemy of that. By stabilising inflation, you’re likely to stabilise interest rates, which could mean lower mortgage rates, although at this point that’s a challenging sentiment to predict.

Working with experts in uncertain times

With what we can easily describe as being a tumultuous, if not chaotic, year, it’s easy to feel overwhelmed when looking at the housing market, especially when only recently lenders were pulling mortgage deals following Liz Truss’s disastrous mini-budget.

If you’re in the market for a new home or looking to remortgage, then get in touch with one of our expert advisers today. No concern is too small, and we can help ease some of the stress that comes during uncertain times.

Your home may be repossessed if you do not keep up repayments on your mortgage.

You may have to pay an early repayment charge to your existing lender if you remortgage.

There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

1GOV.UK, 2022
2Which?, 2022
3GOV.UK,2022
4ITV News, 2022
5National World, 2022
6Morning Star, 2022

Because we play by the book we want to tell you that…

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

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