Post Autumn Statement Announcement
2024 has been a challenging year for many, with lots of uncertainty. A year of higher interest rates, various wars around the world, a general election and an autumn budget that we had to wait for what felt like an eternity for. But as we approach the end of the year what does it all mean for the Welsh Property Market and what is in store for 2025. In my time as an agent I have worked through lots of peaks and troughs of the market, the boom of the early 2000’s followed by the financial crash and the credit crunch that followed, Brexit and of course the Covid pandemic. The one thing in common throughout all of these periods is that there were always people wanting to sell and people looking to buy and 2024 has been no different despite all its challenges. The other thing I have noticed is that however bad the news might be it seems the uncertainty that comes with pending elections, budgets, Brexit votes or the uncertainty of the aftermath of a large scale event, like Covid or the financial crisis, is worse than the event itself, ok let’s forget Liz Truss’ mini-budget of 2022 that caused havoc for a while – that was fairly unique, thank God! If we think about it logically the housing market has remained resilient and showed consistent growth over the last century despite all the predictions of many that house prices are out of control and cannot continue to grow as they have. However in the short term these events have all impacted the market, but often that impact is simply homeowners looking to sell, or those thinking about buying, putting things on hold for a while. Waiting 3 months to see what happens after an election for example does very little to impact on the individuals moving plans, but when enough people make the same decision it can shift the balance of the housing market one way or another. At the start of 2024 we all hoped for an improvement on the previous year and as the market warmed up in Spring we were all surprised by the announcement of a July General Election. Many people who had been planning to sell then decided to wait to see what happened at the election. The election came and went and the markets all reacted positively, the housing market was no different. Interest rates were cut and the housing market started showing signs of significant recovery with buyer confidence high. However this was soon quashed with the announcements being made by the new Government that the forthcoming Autumn Budget would be painful, what followed was a Summer and Early Autumn of uncertainty and nervousness and sellers and buyers putting things on hold while they wait to see what happens. So what did the budget mean for the housing market? Capital Gains Tax (CGT), rates were increased for non-property assets, which could impact homeowners with large amounts of land, otherwise it remains at 18% (basic rate) or 24% (higher rate) on residential property. Inheritance Tax (IHT), no major changes for residential property. The threshold of £325,000 remains, with higher allowances for spouses, civil partners and children. However changes to Business Property Relief could impact those with business premises or agricultural property they are hoping to pass through the generations. Stamp Duty/Land Tax, although this has been changed in England the Welsh Government have not yet announced their decision on what they will be doing, so for now Land Tax in Wales remains unchanged, we will have to wait until 10th December to discover their decisions when they publish their budget. Although there have been some tax increases and I realise many small businesses in particular may find the change to national insurance difficult to manage it has not been as painful as many expected, especially in the context of the housing market. The Bank of England monetary policy committee opted to cut interest rates again at the start of November, with many experts predicting further cuts this winter. Goldman Sachs recently predicted that interest rates in the UK could drop to 2.75% by the end of 2025. If these rate cuts occur they could help to make the budget news a thing of the past and provide significant relief for mortgage holders, boosting affordability and encouraging more activity in the property market. Transaction levels across Wales are up 11% in Q3 2024 compared to Q3 of 2023 and in our experience at the ‘coal face’ of the market and also looking at data from rightmove there has been a further increase in activity since the budget and subsequent cut in interest rates. So as we approach 2025 on the back of increasing, but still relatively low, number of transactions during 2024, it is reasonable to expect that falling interest rates and a lack of distractions will lead to more buyer activity in 2025 and as buyer confidence grows and interest rates fall the balance is likely to tip further toward at the very least a balanced market and we could even dream of a market more in favour of sellers once again. How to make sure you sell in 2025 With an improving market 2025 is likely to offer a great opportunity to anyone who has been trying to sell in 2024, but with average house prices still 3.1% down on the peak in 2022 despite a rise of 2.5% in Q3 of 2024 there are still likely to be challenges. With more properties on the market for sale now than at any point in the last few years there is certainly likely to be continued competition meaning homeowners wanting to sell for a premium need to make sure there property stands out and that their agent is doing all they can to promote their property widely. We have developed a comprehensive social media strategy that compliments our more conventional marketing through Rightmove, Zoopla and OnTheMarket and helps us