Economist warns of potential property tax increase in the upcoming Budget, causing consumer caution and stagnant house prices. Think tank warns further tax hikes could lead to a property market crash. TaxPayers’ Alliance urges Rachel Reeves to rule out housing tax rises to avoid economic disaster.
Industry insiders predict a temporary drop in house prices in August before a rebound in September. Mortgage rates slightly increased following the base rate cut, leading to borrower confusion. Demand expected to surge in September as lenders compete for business before year end.
Nationwide reports slight increase in typical property sizes over past decade, except for flats. Terraced houses have seen the largest increase in size, while flats have decreased in size. Owner-occupied properties have the highest average floor area compared to rented sectors. England’s average dwelling size is smaller than some European neighbors. Mortgage brokers fear Rachel Reeves’s Budget could disrupt the housing market. Increased loan-to-income ratios at HSBC UK and First Direct may help first-time buyers. Housebuilders saw gains on the stock market as mortgage approvals hit a six-month high. House prices fell as buy-to-let investors exited the market. Economists see strong housing market in July despite recent price drop. Mortgage approvals hit a six-month high, easing fears of a slowdown in the housing market. Middle-class homeowners are the new target for potential tax revenue, facing a property tax proposed by Rachel Reeves. London and the South East would be hit hardest, with estimates suggesting a £4.2bn annual tax take. Mortgage approvals increased in July, showing momentum in the property market, but Britons borrowed less for mortgages. Housebuilding stocks were little changed after a survey showed prices fell unexpectedly. The private sector is expected to shrink due to fears of a tax raid in the autumn Budget.
Economists warn that Britain’s housing market could suffer due to speculation about property taxes, with potential buyers adopting a “wait-and-see” approach. Tax fears could lower house prices further, with experts cautioning about the impact on sales and prices. Despite economic challenges, the property market remains resilient, with sellers adjusting prices to secure deals and maintain competitiveness. House prices fell for the fourth time in six months due to weak employment and high mortgage rates. The drop occurred despite the Bank of England cutting interest rates. Analysts had expected a rise, but prices slipped by 0.1%. Affordability remains an issue for prospective buyers, hindering house price growth.
Nationwide’s chief economist Robert Gardner highlighted the challenges in the housing market, including high mortgage rates and stretched affordability. The cost of servicing a mortgage is a barrier for many, with an average earner facing high monthly payments. Affordability may improve gradually if income growth outpaces house price growth.
Asian shares fell due to profit-taking impacting Japanese tech groups. US markets were closed for Labor Day, leading to thin trading. The dollar and bonds were under pressure ahead of a busy week for US data. Japan’s Nikkei fell 1.5%, driven by a 9% slide in chip group Advantest after a significant climb. South Korea’s market fell 1.4%, causing concern among Asian investors. A US federal appeals court ruling on Donald Trump’s tariffs adds to the uncertainty. European nations are making plans for troop deployment in Ukraine if a peace agreement is reached, according to Ursula von der Leyen.
Read more at Yahoo Finance: House prices drop as Reeves eyes property tax