UK housing market stumbles, employers lose confidence on Budget worries
Reports in British media have suggested that Rachel Reeves might look to the housing market as a source of extra tax revenue
[LONDON] Britain’s housing market lost momentum for a third month in a row and confidence among businesses has fallen sharply, according to two surveys published on Thursday (Oct 9) that showed worries about finance minister Rachel Reeves’ November Budget.
The Royal Institution of Chartered Surveyors (Rics) said that its measures of buyer demand and agreed sales were stuck in negative territory in September, as they both were in July and August.
The Rics house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, improved slightly to -15 from -18 in August.
Tarrant Parsons, Rics’ head of market research and analysis, said that there was a broad sense of hesitancy in the market.
“Ongoing uncertainty around potential measures in the upcoming Budget is also likely adding to the prevailing cautious sentiment,” Parsons said.
Reeves is expected to raise taxes in her Nov 26 Budget, to remain on track to meet her targets for fixing the public finances. Reports in British media have suggested that she might look to the housing market as a source of extra tax revenue.
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An unexpected fall in mortgage lender Halifax’s measure of house prices in September, published on Tuesday, was also seen by economists as a sign of worries about the Budget.
In the rental market, the Rics measure of landlords making properties available dropped to its lowest since May 2020, while demand from renters remained stable, contributing to an expected 3 per cent increase in rents over the next 12 months.
The supply of rental properties has been hit by landlords selling homes and apartments after a rise in borrowing and other costs in recent years, and due to their worries about planned legislation to give more rights to tenants.
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A separate survey by the Institute of Chartered Accountants in England and Wales (ICAEW) showed confidence among businesses sank to its lowest level in three years in the July-to-September period.
A record 60 per cent of businesses said that the tax burden was a growing challenge, the ICAEW survey found.
Suren Thiru, the institute’s economics director, said that many employers were feeling the hit from Reeves’ decision in her first Budget last year to raise their social security bill.
“The mounting squeeze from plummeting confidence and a weakening outlook for domestic sales and employment mean the economy will struggle to deliver the uplift in growth needed to avoid more painful decisions at the Budget,” Thiru said. REUTERS
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