Housing Market Faces Decline as Average Asking Prices Drop

Concerns surrounding the recent Budget have led to a significant decline in the UK housing market, as new seller asking prices decreased by 1.8%, or £6,589, month-on-month in November 2023. This drop brings the average price of a home coming to market across Britain to £364,833, according to data released by the property website Rightmove. This decline is notable, as it surpasses the typical drop expected during this time of year.

Market Reactions to Budget Uncertainty

Rightmove attributes the downturn in prices to widespread speculation regarding the Budget, which is fostering uncertainty, particularly at the higher end of the market. Surveyors have also reported a marked cooling effect on housing activity throughout the UK. According to the Royal Institution of Chartered Surveyors (RICS), there has been a decline in buyer demand, sales activity, and new instructions—all indicators of a market in retreat.

The RICS report indicates that a net balance of 24% of professionals observed a decrease in new buyer inquiries, marking the weakest reading since April. Similarly, 24% noted a reduction in agreed sales, and 20% reported a decline in new instructions to sell, the lowest level since 2021. In terms of house prices, a net balance of 19% of professionals indicated that prices are falling rather than rising.

Tarrant Parsons, head of market research and analysis at RICS, stated, “The housing market continued to show weakness in October, with activity levels drifting lower amid a lack of buyer confidence.” He emphasized that the ongoing uncertainty regarding potential measures in the forthcoming Budget is exacerbating the cautious sentiment among both buyers and sellers. Coupled with above-target inflation and rising unemployment, these factors are generating a challenging environment for the housing market.

Looking Ahead: Potential Impact of the Budget

As the housing market navigates these turbulent waters, the upcoming months will be crucial in determining how it responds to the Budget. Parsons noted that the clarity over housing taxation policy could play a pivotal role in stabilizing market sentiment. However, if the announced measures exert additional pressure on activity, there is a risk of further deepening the current slowdown.

The dip in house prices signals a broader trend that could affect various stakeholders, from potential homebuyers to real estate professionals. As the market awaits the Budget, the implications of these developments will be closely monitored, with many hoping for a turnaround in the near future.