Annual house price growth halves as buyers wait for Budget clarity

“Many buyers and sellers alike appear to be sitting on their hands as they wait for a clearer economic backdrop and a better understanding of the policy landscape ahead of Chancellor John Healey's first Budget. When purchasing a home is one of the biggest financial decisions a person will ever make, uncertainty over inflation, interest rates and potential policy changes can be enough to delay a move by weeks or even months.

“Similarly, over the past few months the mood music has become increasingly cautious. While the desire to own a home inevitably remains strong, households are contending with an uncertain outlook. Ongoing tensions involving Iran have fuelled concerns about inflation and raised fresh questions about how quickly borrowing costs might ease, leaving many prospective buyers reluctant to stretch themselves financially.

“At the same time, attention is increasingly turning to the Budget. Speculation around changes to property taxation, including reports that the threshold for the so-called Mansion Tax might be lowered, creates uncertainty for buyers and sellers. Whether or not those rumours prove accurate, the speculation itself can influence behaviour, particularly in higher-value transactions, prompting some sellers to accelerate deals while causing others to hold off altogether.

“For now, the market feels less constrained by a lack of demand and more by a lack of confidence. Buyers are looking for certainty on inflation, mortgage costs and government policy before taking the plunge, while sellers are having to adjust to a market where purchasers are becoming increasingly selective.

“The Budget may at least provide one piece of the puzzle for buyers and that could provide some of the necessary clarity to make the leap despite the more macroeconomic issues likely hanging around for longer. But until then a degree of caution is likely to remain the dominant feature of the housing market.”