Market News

By Irina Anghel

(Bloomberg) -- Asking prices for UK houses fell more than usual in November after the budget disappointed prospective buyers and affordability remained stretched, according to Rightmove.

The average price of a home put up for sale fell 1.4% to £366,592 ($463,100), almost double the November norm. The scale of the decline suggests “pre-Budget jitters have turned into post-Budget disappointment,” the property site said in a report published Monday.

“We had been seeing a drop-off in buyer demand, both in the lead-up to the Budget and in its immediate aftermath, as it was confirmed that there will be an increase to stamp-duty charges for most home-movers and second-home buyers, and some first-time buyers,” said Tim Bannister, Rightmove’s director of property science. 

November was the second consecutive month when prices underperformed historic averages. 

Fears of a revenue-raising budget were more than confirmed on Oct. 30, when Chancellor of the Exchequer Rachel Reeves announced £40 billion of tax hikes to fix public services and fund investment. She also confirmed that thresholds for paying stamp duty, a homebuying tax, will fall as planned from April with buyers of second homes facing an increased tax rate too. The blow was partly offset when the Bank of England cut interest rates a week later.

Looking ahead, affordability may take longer to improve than previously thought, Rightmove said, with the BOE signaling a cautious approach to further interest-rate cuts. Homebuying budgets could be further stretched if employers respond to a huge increase in their payroll taxes by bearing down on wages.

With the number of homes for sale per estate agent branch at its highest for the time of year since 2014, seller competition is “intense,” Rightmove said. 

“We still expect some twists and turns next year,” Bannister said. “The speed at which mortgage rates come down next year will be key in determining activity levels for some of the market’s traditionally busiest periods, and sellers will still need to price temptingly enough to secure a buyer while the choice of homes for sale remains as high as it is right now.”