With the budget behind us, what’s next for the housing market?

After months of headlines, rumours, and speculation, the Chancellor’s so-called ‘Hokey Cokey’ Budget has finally been revealed (as it turned out, a little early – thanks to the OBR!) — and for the housing market, the result was much quieter than many had anticipated. Fears of sweeping reforms to stamp duty and a major revaluation of council tax bands did not materialise. Instead, the changes were mainly limited to a new “high-value council tax surcharge” for homes worth over £2 million.

For most homeowners, this cautious approach will be welcome news. After a sluggish year marked by hesitancy and delayed transactions, the key question now is whether the market will regain momentum in the coming months.

Budget certainty may help unlock stalled decisions

Market activity in recent months has been driven as much by uncertainty as by economic fundamentals. Potential buyers and sellers have taken a “wait and see” approach, cautious that a significant change to property taxes could materially affect affordability or pricing.

With the Budget now behind us — and no major changes announced — that uncertainty should lessen. History suggests that clarity, rather than the specific details of tax measures, is often what opens up transactions. We may therefore see many postponed listings entering the market this autumn, with buyers who paused their searches returning more confidently.

While the new surcharge will affect a small proportion of high-value homes, it is unlikely to ripple significantly into the wider market.

Mortgage-rate trends: a key to renewed activity

Perhaps the most significant immediate factor affecting buyer confidence will be mortgage interest rates. The Bank of England (BoE) base rate is currently at 4%. Since August 2024, the BoE has executed a series of reductions, and though the base rate has been held at 4% in its two most recent decisions, markets continue to price in the likelihood of further cuts at the next policy meetings.

This potential for lower base rates has already caused many lenders to cut their fixed-rate mortgage offers, with reports of fixed deals falling below 3.6% — among the most competitive rates seen since 2022.

Assuming further base-rate cuts happen and inflation continues its slow decline, mortgage rates are expected to gradually ease through late 2025 and into 2026. For homebuyers — especially first-time buyers and those looking to move up — this downward pressure on borrowing costs could significantly improve affordability, reduce monthly payments, and encourage more people to re-enter the market.

For prospective sellers, lower mortgage rates may attract a larger pool of buyers — a factor that could encourage more transactions and eventually restore clarity and momentum to the market.

Other recent changes shaping the market

Alongside the Budget, several ongoing shifts will shape the autumn and winter market:

• Leasehold reform continues to progress, with the government reaffirming its commitment to improving transparency for leaseholders and making enfranchisement more accessible.
• Energy efficiency obligations remain a key factor for landlords. Although plans for stricter EPC requirements have been eased, the drive towards greener homes continues to influence investment choices.
• Rental market pressure continues, with rising demand and limited supply keeping rents high. The Chancellor’s decision to increase tax on property income may lead some landlords to reassess their portfolios, potentially freeing up properties for first-time buyers.

A cautiously optimistic outlook

Overall, the post-Budget landscape offers a calmer environment for the housing market. With the threat of significant tax changes gone and the possibility of decreasing borrowing costs ahead, confidence is likely to grow — although gradually and unevenly across regions.

For buyers and sellers, the coming months might offer a more predictable environment for making long-delayed decisions. And for the sector overall, stability — after several turbulent years — may be exactly what is needed.

If you need advice on buying, selling, or any aspect of residential property, our specialist team at BLB is here to help. Call us on 01793 615011 or complete the Contact Form.