Temperature check on the residential market

Many are wondering what the various economic and political changes will do to the property market. Polly Ogden Duffy, Managing Director at John D Wood & Co., shares her insight into the future of the housing market.

After Chancellor Jeremy Hunt announced his recent autumn budget statement, the agility of the property market comes into play once again. Since the budget appeared to dismantle many of his predecessor’s ‘mini-budget’ proposals – from the deadline on stamp duty cuts, changes to council tax, capital gains tax and an end to the current energy price cap from April 2023 – where does that leave confidence within the market?

Confidence is everything, and the desire to maintain a steady environment is a united one, especially as we freefall towards a recession. Despite rising interest rates, the cost of borrowing is still competitive, and mortgage rates have also steadily fallen in the last couple of weeks.

Our expectation is that the market will remain resilient. However, it is likely to be more sluggish over the next 12 months, with more rigorous negotiations between buyers and sellers, and a downturn in overall transactional activity as the cost of living crisis impacts us all more and more.

London and prime UK locations will still be seen as great places to put down roots, build businesses and make investments. Prices will no doubt soften, perhaps with the sharpest adjustment expected in 2023, as many factor rising costs and higher taxes into their budgets.

We still wait to see what direction the Renters Reform Bill will take – will it drive more landlords to sell their investment property? With landlords owning 19%* of the available property in the UK, we hope that a balance can be achieved to ensure that letting property is still seen as a wise investment.

Adopting a long term view, property will remain a solid investment – all in all, the love affair continues and is, in many opinions, a relatively stable personal pension pot alternative.

Polly Ogden Duffy, Managing Director

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* English Housing Survey - Headline Report, 2020-21