Business news live: UK house prices fall with market ‘struggling to find its feet’ after stamp duty change

Prices might be down for now, but it’s a temporary blip and a normal part of summer, say some experts.

Two here offer different reasons why the upcoming period might see prices increase again:

“The market may have paused over the summer, but the annual picture remains one of growth and resilience,” said Verona Frankish, CEO of Yopa.

“With the holiday season behind us, attention now turns to the final run up to Christmas, which is traditionally one of the busiest periods of the year and one of the hard deadlines many buyers and sellers set for their completion data.

“The added motivation of moving before the festive season, combined with improving mortgage affordability, should help drive a strong finish to the year for the housing market.”

Additionally, political uncertainty could see people hold off moving – meaning less supply and higher prices.

“Mortgage rates have been easing slightly but typical fixed deals remain around 4%, keeping monthly payments elevated, and higher inflation will make the path to lower interest rates even longer,” said Karen Noye, mortgage expert at Quilter.

“Speculation around potential reforms in the Chancellor’s upcoming budget, including possible levies on high-value homes or changes to capital gains tax on primary residences, could also cause hesitation among sellers. This would tighten supply further and paradoxically push prices higher, worsening conditions for new entrants to the market.

“Either way, without a significant increase in available homes and clearer policy direction, the market risks stagnation.”

Some reaction now to bring you from a range property and finance experts.

Let’s start with Alice Haine – personal finance analyst at Bestinvest, who points out the stamp duty change has had a major impact on the market this year.

“UK house prices fell 0.1% in August, while annual growth softened to 2.1% from 2.4% in July, suggesting the market is struggling to find its feet following the hike in stamp duty costs that came into force in April when thresholds reverted to their previous, lower levels,” Ms Haine said.

“While the summer has seen in a surge in homebuying activity, sellers are pricing more realistically in a bid to secure deals at a time when buyers hold the upper hand. Sellers, who initially listed at inflated prices, are increasingly adjusting their asking prices to stay competitive.

“Meanwhile, speculation is mounting over further property tax reforms, just months after the market was forced to absorb the end of the stamp duty break. Chancellor Rachel Reeves is expected to deliver fresh tax hikes at her upcoming fiscal statement amid concerns over the health of the public finances, with property taxation believed to be a target.”

We’ll start with UK house prices – and the latest Nationwide data shows a 0.1% drop month on month.

It was a surprise drop overall despite known struggles in the market, with the average price of a property in the UK now at £271,079.

However, year on year there is still growth in prices – though it is slowing.

“The relatively subdued pace of house price growth is perhaps understandable, given that affordability remains stretched relative to long-term norms,” Robert Gardner, Nationwide’s Chief Economist, said.

“House prices are still high compared to household incomes, making raising a deposit challenging for prospective buyers, especially given the intense cost of living pressures in recent years.

“Combined with the fact that mortgage costs are more than three times the levels prevailing in the wake of the pandemic, this means that the cost of servicing a mortgage is also a barrier for many. Indeed, an average earner buying the typical first-time buyer property with a 20% deposit faces a monthly mortgage payment equivalent to around 35% of their take-home pay, well above the long run average of 30%.”

Welcome to September and welcome to our live business and money blog!

Today we’ll look at the latest stock market news, the best bank accounts for your money and plenty more.