Demand for buying homes drops by more than a fifth since mini-budget

The demand for buying houses dropped by more than a fifth in the two weeks since the UK’s mini-budget, a new report says.

Property company Zoopla says the number of new sales agreed fell by 15% last week and uncertainty over the housing market since the chancellor’s announcements had “dented activity”.

In the first hours and days after Kwasi Kwarteng‘s mini-budget – which led to rising interest rates, the value of the pound dipping and the Bank of England being forced to step in – there had initially been a surge in the number of homes for sale, as those with low mortgage rates negotiated beforehand, rushed to get their properties to market.

But then homebuyer demand dropped.

The greatest fall came in the West Midlands (-28%) and South East (-24%), and the lowest in Scotland (-11%).

Truss is out ‘and we have the numbers’, says Tory MP – politics latest

Richard Donnell, Executive Director at Zoopla said: “Uncertainty amongst home buyers has dented housing market activity. After an initial scramble from those with cheap loans to agree sales, the last week has seen buyer interest drop by a fifth.”

Housebuilders’ shares tumble on back of mortgage market chaos

Government warned to reinstate eviction ban to prevent people from losing homes during cost of living crisis

Climate change: Target of building 300,000 homes a year would overshoot England’s entire carbon emission commitment, report warns

Prime Minister Liz Truss faces open revolt in her party over the £45bn package of unfunded tax cuts in the mini-budget, which unleashed chaos in the markets when it was announced last month.

The turmoil caused mortgage rates to rise sharply, with the central bank expected to raise its base rate to 6% by next summer.

Around 40% of available mortgages were withdrawn from the market following the chancellor’s statement.

Ms Truss and Mr Kwarteng have said the cuts are needed to get the economy growing. Data published on Wednesday suggested the country was heading for recession.

Please use Chrome browser for a more accessible video player

A survey for the Bank of England released on Thursday showed lenders also expect the availability of mortgages and consumer and corporate credit to shrink in the coming months as more people and businesses default on loans.

Zoopla’s report did add, however, that the Bank of England has reported an unseasonal 17% surge in new mortgage approvals over August, as buyers looked to move ahead of rate rises.

Contentious proposals

Mr Donnell said: “The final few weeks of the year will be about closing out existing deals with agents, mortgage brokers, buyers and sellers facing increased down-valuations and general concerns about prices falling in 2023.

“Those with cheaper mortgages will continue to seek out homes to buy, providing some support to market activity.

“While we have seen a lot of focus on mortgage rates, it is important to note that a quarter of buyers don’t use any mortgage and many more have small sized loans, so the higher cost of borrowing will mainly hit those seeking larger sized loans.”

Last week, after vocal opposition from Tory MPs and a surge in support for Labour in the polls, Ms Truss and Mr Kwarteng abandoned the main tenant of their mini-budget, which was to abolish the highest 45% tax rate.

Sky News understands discussions are under way in Downing Street over whether to scrap some of the contentious proposals which remain in the chancellor’s tax-cutting mini-budget.

Read Entire Article