Housing market growth stalls according to Rightmove due to budget uncertainties
In the UK housing market, October 2023 has seen a mixed picture of house price growth, with some regions experiencing robust growth while others have remained relatively stagnant. The average price of a property in the UK now stands at £293,000, an increase of £8,000 compared to a year ago [1].
The number of homes available for sale in October 2023 was 12% higher than the same time period in the previous year, offering more choice to buyers [2]. This increase in supply has contributed to a subdued price growth in October, according to Tim Bannister, the director of property science at Rightmove [3].
The economic outlook and government policies, including the upcoming October Budget, play a significant role in shaping the UK housing market. The key factors influencing house price growth in 2025 include real income growth, mortgage rates, housing supply constraints, government policy reforms, and stamp duty changes [4].
Real income growth, as highlighted by the Office for Budget Responsibility (OBR), is the main driver of housing demand and thus house price inflation [4]. Despite the recent easing of mortgage rates due to Bank of England rate cuts in 2025, housing supply remains constrained, underpinning upward price pressure [1][5].
Upcoming changes to stamp duty (property transaction tax) tied to recent or future budget announcements influence short-term market dynamics. The Nationwide Building Society expects volatility with an initial spike in transactions as buyers rush to avoid increased stamp duty, followed by a temporary slowdown [4].
The Budget for October 2023, being prepared by Rachel Reeves as the chancellor, is scheduled for October 30. The overall economic outlook and government policies in recent budgets support moderate house price increases by improving mortgage affordability and encouraging housing supply growth [1][2][4].
Regional variations continue, with stronger price growth in Scotland and Northern Ireland and slower growth in London [2][3][4]. In England, prices increased 2.3% to reach an average of £310,000. The North West saw the fastest annual house price growth in England (4.6%), while the South West had the lowest annual house price inflation of all regions in England, with prices rising by just 0.8% [2].
In Wales, house prices rose 3.5% to reach an average of £223,000, and in Scotland, house prices increased by 5.4% to reach an average of £200,000 [2]. The official house price index from the Land Registry and the Office for National Statistics reveals that of the four UK regions, values rose the fastest in Northern Ireland (6.4%) [2].
The average house price in a new town is £300,656, while the UK average is £346,995. Over the past 30 years, the average price of a property in a new town has increased by 441%, slightly behind the average for the whole of the UK at 454% [6].
Halifax reported that house buyers could save up to £50,000 by purchasing a property in a new town built after the Second World War compared to elsewhere in the UK [3]. Despite the current market conditions, Tim Bannister advises sellers to price their homes competitively in order to find a buyer [3].
In conclusion, the October Budget’s impact on house prices is mediated through stimulus to housebuilding, adjustments to stamp duty, and shifts in mortgage market conditions, all operating alongside broader economic factors driving demand and supply balance in the UK housing market in 2025.
- The upcoming changes in stamp duty, as part of the October Budget, can influence short-term market dynamics, causing an initial spike in transactions and temporary slowdown, according to predictions by the Nationwide Building Society.
- The mix of house price growth in October 2023, with some regions experiencing robust growth while others remain stagnant, can be influenced by factors such as real income growth, mortgage rates, housing supply constraints, government policy reforms, and stamp duty changes, as stated in the forecast for 2025.
- Investing in real estate, specifically newly-built properties, in certain regions of the UK can offer substantial savings for house buyers, with Halifax reporting that buyers could save up to £50,000 by purchasing a property in a new town in comparison to other locations in the UK.
