The impact of mini-budgets is still being felt in today’s real estate market

“The following year [the Mini Budget]“We saw declines in mortgage approvals, transactions and home prices as market confidence waned amid strong economic headwinds.”
– Guy Gittins – Foxtons

The latest market insights from Foxtons have shown that the property market is still feeling the effects of the disastrous Truss Mini Budget with the Autumn Statement looming.

However, there are numerous positive signs regarding both buyer activity and property prices.

Foxtons’ research analyzed house price growth, transaction volumes and mortgage approval levels in the 12 months before the mini-Budget, the following year and last year to show what impact it had and where the market stands today.

The research shows that in the 12 months leading up to the mini-Budget (September 2021 to August 2022), a total of 821,892 mortgage approvals were recorded across the UK property market.

A total of 1,277,320 property transactions also took place during this period, with the average property price in the UK increasing by 8.3%.

However, in the subsequent twelve months (September 2022 to August 2023), the total number of mortgage approvals fell to 593,394 – a decrease of 27.8%.

Transaction volumes also fell by 13.3% to 1,107,720 and as a result of this lower market activity the average house price in the UK fell by 1.8%.

The negative impact of the mini-budget on the property market is still visible today, with just 941,300 transactions completed across the UK in the last 11 months (September 2023 to July 2024 – current figures).

But although the market still bears scars caused by the mini-budget, there have been numerous signs of positive sentiment in the property market over the last year.

Buyers are returning to the market with confidence, buoyed by greater certainty from rate pegging since August last year, with the first rate cut in four years just over in August this year, further bolstering market sentiment.

As a result, the total number of mortgage approvals in the last 11 months stands at 617,266, up 4% on the 12 months following the mini-Budget, although still well behind the market pace of the 12 months before that.

Additionally, the average house price in the UK has risen by 2.3% in the last 11 months alone, compared to a fall of 1.8% in the 12 months following the mini-Budget.

Guy Gittins, CEO of Foxtons, commented: “The infamous Mini Budget 2022 will go down in the history books and there is no denying the immediate and negative impact it has had on both the UK housing market and the wider economy.

“The following year, we experienced declines in mortgage approvals, transactions and property prices as market confidence waned amid strong economic headwinds.

“However, 2024 has been a story of positive development in the property market and we have seen more buyers return to the market, more offers made and accepted and realized prices also begin to increase.”

“Of course, we still have a long way to go before the property market fully returns to its pre-mini-Budget state, but current indicators suggest we are firmly heading in the right direction.”

“Unfortunately it doesn’t look like our new Labor government has any plans to accelerate this return to form in the forthcoming Autumn Statement and there are no proposals to date for incentives for homebuyers.”