November Market Update

October went out with a bang, thanks to the Chancellor, Rachel Reeves, delivering the Autumn Budget. While the announcement may have hogged the headlines, there were some encouraging property stories you may have missed. Here are 11 things we learnt about the property market in October.

1) Rates look set to tumble: with inflation below its 2% target, the Bank of England said it could be ‘more aggressive’ when cutting the bank rate moving forwards. Rate cuts are being predicted for November and December. As a result, mortgage rates may drop.

Property sales soar

2) Increasing appetite for purchasing: Zoopla’s October House Price Index claimed ‘sales activity is running at the highest level since the 2020 boom’. It says lower mortgage rates have spurred purchasers into action. The favourable conditions means there are 26% more homes under offer now, compared to 12 months ago.

First-time buyers lead the pack

3) Starter homes being snapped up: Zoopla says the most active buyer group for 2024 will be the first-time buyer – accounting for 36% of all purchases. They have been helped by an exodus of landlords, whose smaller, more affordable properties have been snapped up by homeowning novices.

4) The average house price edges up: Zoopla’s October House Price Index also revealed how house prices behaved in the last month. The average has crept up £100 to reach £267,500. Terraced houses increased the most in value – shooting up £800 over a four-week period.

5) Inheritance tax remains broadly unchanged: the Chancellor was expected to use the Budget to tinker with inheritance tax thresholds and allowances. Instead, they remain frozen until 2030. New was the intention to bring inherited pensions into inheritance tax from April 2027.

6) Capital gains tax for property frozen: capital gains tax applied to those selling an additional property was expected to increase in the Budget. While the rate is increasing for all non-property assets, those selling additional homes will pay the same rate as before the Budget – 18% for basic rate tax payers, and 24% for higher and additional rate tax payers.

Stamp duty revision

7) Additional home buyers to pay more: not predicted was an increase to the additional homes stamp duty tax rate. The pre-Budget surcharge of 3% increased overnight, taking effect on 31st October 2024. The new surcharge rate is 5% - applicable to second home and buy-to-let purchases.

8) First-time buyers also affected: while not mentioned in the Budget, a previous Labour announcement confirmed first-time buyers will have to pay stamp duty on the first £300,000 of a home’s value. This replaces the current and more beneficial £425,000 threshold. The change takes effect on 1st April 2025.

9) Wales rules out rent controls: Welsh ministers published its white paper on housing sector reforms in October, announcing there is not enough evidence to support rent controls. It felt such measures may exacerbate issues in the Welsh private rental sector. Instead, it will start gathering more localised rent data to inform its future decisions.

Scottish blueprint under scrutiny

10) Worries about supply and inflation: Welsh ministers cited emerging evidence from Scotland as one of the reasons it is deferring the decision to introduce rent controls. Although the SNP want to make temporary rent controls permanent, the move isn’t supported by Labour. The fact that Scotland has experienced high rates of rental inflation may be behind the shift in thinking.

11) Average UK rent rises again: although rents are rising at a much slower rate, HomeLet says the UK’s average rent has increased 0.5% in the last month. New tenancies now cost an average of £1,331. London saw the biggest month-on-month increase, at 2.4%.

If you would like to know more about your local property market, please get in touch.