(Bloomberg) -- Buyer “jitters” ahead of Chancellor of the Exchequer Rachel Reeves’ first budget this month are muting a typical autumn bounce in house prices, according to property website Rightmove.
The average asking price for a UK home rose 0.3% month-on-month to £371,958 in October, Rightmove said Monday, a smaller increase than expected at a time of year when the market typically picks up.
While sales and buyer demand are up strongly on last year, Rightmove said it detected hesitancy among some buyers who are waiting for cheaper mortgage rates and clarity over Reeves’ budget on Oct. 30. Prices were also being held back by more buyer choice increasing competition among sellers, it said.
The housing data is another indication that concerns over Reeves’ expected belt-tightening and tax-raising budget are weighing on household confidence and threatening to hold back the economy’s recovery.
Gloomy warnings over the new Labour government’s dire fiscal inheritance have spooked consumers and businesses, causing confidence gages to slump — though stronger-than-expected retail data in October offset that narrative.
“Some estate agents report that some movers are now waiting for budget clarity and anticipated cheaper mortgage rates later this year,” said Tim Bannister, Rightmove’s director of property science.
Rightmove found that the number of homes for sale is 12% higher than a year ago with more properties per estate agent branch than at any time since 2014. It said this was “intensifying competition to find affordability-stretched buyers, some of whom may also have pre-budget jitters.”
After the budget, the market is likely to be supported by lower mortgage costs from last year’s highs, Rightmove said. The average five-year fixed mortgage rate was 4.61% last week, down from 6.11% at the peak in mid-2023, it said.
Buyer confidence may also get a boost from interest rate cuts by the Bank of England. Traders currently expect the rate-setters to reduce borrowing costs for a second time next month and see a 60% chance of another quarter-point move in December. The odds of successive cuts was boosted last week by inflation falling below the BOE’s 2% target for the first time in over three years.
©2024 Bloomberg L.P.