Month: October 2024

The average house price in the UK is £267,100 as of August 2024 (published in October 2024).

Property prices are now at 0.7% inflation compared to a year ago. However, the average UK house price is set to rise by 2.5% by the end of the year.

Home buyers are benefitting from the lowest average mortgage rates for 15 months, which is supporting double-digit growth in all key measures of sales market activity. Annual house price inflation is positive, but remains below 1%.

Nationally, home buyer demand is up 26% on this time last year, as more homes are listed for sale and sellers look for somewhere new to buy.

The average mortgage rate for a new 5-year 75% LTV loan is 4.3%, compared to 5.5% a year ago, the lowest since May 2023.

And intense competition among lenders is keeping rates attractive for buyers, especially for those with larger amounts of equity.

The number of sales agreed is now 25% higher than a year ago as households that have held off making moving decisions over the last 2 years return to the market.

Sales are up by over 10% across the UK, and more than 30% across the East Midlands and North East.

Rachel Reeves will not use her budget to increase capital gains tax on the sale of second homes.

The Times reports that capital gains on profits from the sale of shares and some other assets, which is currently levied at 20%, is likely to increase by “several percentage points”. But the rate will not change for second homes.

The chancellor will reportedly leave the rate of capital gains tax on the sale of second homes and buy-to-let properties untouched amid concerns that increasing it would cost money.

When the Conservatives lowered the rate from 28% to 24% at the last budget, the Office for Budget Responsibility said that doing so would actually raise nearly £700 million because of increased property transactions.

Ministers are reportedly concerned that raising tax on the sale of second homes would damage overall revenues.

More than half of all capital gains relates to the sale of shares, while just 12% is from the sale of property.

It is understood that ministers discussed their options and it was concluded that people would deliberately defer selling assets in a bid to avoid being hit by higher rates.

One government source suggested that revenues from increasing capital gains tax would be in the “low billions”.

Reeves is said to be drawing up plans for up to £40bn worth of tax rises and spending cuts to avoid a return to austerity and real-term cuts to government departments. Most of the money will have to come from tax rises.

Stuart Adam, a senior economist at the Institute for Fiscal Studies, told the press: “Simply increasing headline rates of CGT would raise limited revenue and cause economic damage. If the chancellor wants to raise significant sums, it is essential that rate increases are accompanied by changes to the way the tax works — removing some ill-conceived reliefs while giving more generous deductions for investment costs and losses.”

The UK housing market is showing signs of a rebound, with new data from the Royal Institution of Chartered Surveyors (RICS) highlighting a rise in house prices and sales due to falling borrowing costs.

For the first time since October 2022, the RICS house price balance turned positive, hitting +11 in September and beating forecasts. Surveyors are feeling more optimistic, with a net balance of +54 expecting price hikes over the next year—the highest optimism since April 2022. Sales expectations have shot up to a net balance of +45 from just +3 last year. This recovery follows August’s dip in borrowing costs, as the Bank of England kept its benchmark rate at 5%. Many investors expect a rate cut in November, which could further boost the market. Meanwhile, Halifax notes house prices are rising at their fastest rate in months, though an upcoming increase in capital gains tax might lead to more listings, potentially tightening rental supply.

The rejuvenated UK property market is attracting investor interest, as lower borrowing costs and strong price forecasts create an optimistic outlook. With the Bank of England’s next move under scrutiny, real estate-linked sectors might experience volatility, presenting both opportunities and risks.

The UK’s housing revival mirrors wider economic themes, such as fiscal policy shifts and interest rate projections. With potential tax adjustments ahead and global inflationinfluencing monetary policies, the UK situation highlights the critical balance between government actions and market developments, a trend seen worldwide.