The Chancellor, Rishi Sunak, has been accused of failing to tackle the ‘cost of living crisis’, as the property market begins to react to the latest budget.
Demand has already been affected as home owners learn the extent to which fuel increases, growing inflation and mortgage rate hikes will affect their budget.
First time buyers are said to be the first hit and there is a reported decrease in the number of first-time buyers looking to buy property. Second step home owners are also being affected by affordability issues, which are red-flagging prospective home movers even when they own an existing property and want to upsize.
The Office for Budget Responsibility forecasts a 2.2% decrease in real-term take home pay this year, which would in itself make this the real-term take home worst year on record. However, the Resolution Foundation expects the poorest households to suffer a 6% decrease of take home pay in real terms.
Rental increases are also expected to add further stress to buy to let landlords and tenants, and there is the potential for an increase in the number of tenants in rent arrears.
In the months it will take for the those at the bottom of the market to fully take in the extent of these issues, the more wealthy home movers are continuing to buy second homes or upsize their own property in a bid to get ahead of mortgage rate rises. The Office for Budget Responsibility estimates that house price growth will continue to rise and may reach 7.4% this year. Should this happen, the average home will cost an additional £20,350 by the end of the year, making it even harder for first time buyers to get on the housing ladder and causing ructions throughout the housing market.