Autumn Budget uncertainty keeps house prices under pressure

The upcoming Autumn Budget is expected to leave house prices constrained as uncertainty looms.

According to the latest Acadata House Price Index, house prices were 3% lower than a year ago, marking the weakest year-on-year performance for a considerable period.

Consumer confidence remains fragile, and the approaching Autumn Budget is weighing heavily on housing demand.

Landlords adding supply to the market

The findings reveal that landlords are selling off parts of their portfolios, adding supply to the residential market, but uncertainty around the Budget continues to keep prices under pressure.

The data shows that the average sale price for a home in England and Wales in September was just over £355,000, around 3% lower than a year earlier.

Rob Owens, e.surv’s head of research, said: “The latest house price report for England and Wales shows that transaction volumes have stabilised following earlier distortions caused by stamp duty changes. Sales activity in July and August returned to typical seasonal levels, suggesting the market has now absorbed the impact of those policy shifts.

“However, while volumes have recovered, prices remain under pressure. Average house prices in September stood at £355,100, unchanged from August and 3% lower than the same time last year.

“Market sentiment continues to be weighed down by economic uncertainty, concerns over employment, and speculation around potential tax changes in the upcoming November Budget. With downsizers and landlords adding supply to the market, and refinancing pressures mounting for borrowers, price growth remains constrained.”

Any Budget measures aimed at stimulating housing could quickly shift momentum

The data also reveals that despite landlords selling their properties and adding supply to the housing market, there is still not enough supply to meet demand.

Acadata says that, longer-term, house prices continue to be underpinned by the significant shortfall in housing supply. If the Chancellor moves to stimulate housing activity in the Budget, the market will respond.

There are an estimated 2–3 million households waiting to become homeowners, and with the current contraction of the private rented sector, this potential demand could quickly begin to translate into activity with a consequent impact on prices.

Mr Owen adds: “Regionally, price declines have been widespread, with southern markets – particularly the South East, leading the downturn. London was the only area to record a modest annual increase. Despite current challenges, structural undersupply and latent demand from aspiring homeowners suggest that any Budget measures aimed at stimulating housing could quickly shift momentum.”

However, there is reduced expectation of further Bank of England interest rate cuts this year, which Acadata says may limit the extent of any rebound in housing activity.