UK housing market shows strains from “mini-budget”: Rightmove

Posted on October 16, 2022Comments Off on UK housing market shows strains from “mini-budget”: Rightmove

© Reuters. FILE PHOTO: Property estate agent sales and letting signs are seen in south London, Britain, September 23, 2021. REUTERS/Hannah McKay

LONDON (Reuters) – Britain’s housing market lost momentum this month after Prime Minister Liz Truss’s economic plans upset financial markets and triggered a repricing of the mortgage market, data from property website Rightmove showed on Monday.

Asking prices for homes coming to the market rose by 7.8% year-on-year in October, the smallest increase since January.

Britain’s housing market had already been showing signs of cooling after a more than 20% surge in prices since the start of the pandemic as the cost of living rose and the Bank of England steadily increased interest rates.

But last month Truss’s government announced a plan to boost economic growth through unfunded tax cuts that alarmed financial markets.

The turmoil meant some institutions temporarily stopped selling mortgages to new customers, while others ramped up repayment rates for new loans.

Rightmove said the first-time buyer category had been hit hardest by the uncertainty.

“Buyer demand was already starting to soften and higher interest rates were anticipated, but they’ve been brought forward sharply due to market uncertainties,” Tim Bannister, Rightmove director of property science, said.

Rightmove reported a rush of buyers trying to complete sales before mortgage offers fixed at prior lower repayment rates expired.

Bannister said would-be buyers faced tricky decisions now.

“It’s understandable that some new movers who have the option to wait may want a clearer view than they’re getting right now before they proceed with a major purchase such as a home,” he said.

Rightmove’s index of asking prices, which is not seasonally adjusted, typically falls in November and December.

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