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BUDGET 2023: No news, good news for the property market?
Friday, March 17, 2023
Perhaps the key takeaway from Wednesday’s Budget is the Chancellor’s statement that the UK is expected to avoid recession this year, according to the Office for Budget Responsibility. Inflation is also forecast to reduce to 2.9% by the end of 2023. Good news indeed compared to predictions last November, that the average inflation rate for 2023 would be 7.4%. A number of measures will also ease affordability; the current energy price guarantee has been extended a further three months to June 2023 and fuel duty is frozen for the next 12 months. Extra assistance with childcare costs over the next two years should improve household budgets and allow a return to employment for many.
In the absence of recession and with the suggestion that interest rates have now peaked, the property market could expect to see increased stability and a positive outlook for sales and purchases. Many, however, will be disappointed by the absence of measures to address supply in the rental market by encouraging new landlords or convincing existing landlords to remain in the private rented sector. Caution seemed to be the watchword of the day and possibly a missed opportunity for the property industry which was essentially overlooked. Reinstating tax relief on mortgage interest payments and cutting stamp duty could have shown support for the sector. However, neither are on the agenda nor is there a successor for the government’s Help to Buy scheme which has now ended.
In many ways however, this is a positive, well-balanced Budget for 2023 after the turmoil of Q4 2022 and with more to look forward to than might have been anticipated. Avoiding recession, extending the Energy Price Guarantee, and easing affordability for UK households will undoubtedly raise confidence in Q2 2023 and beyond for property investors, particularly if mortgage rates continue to lower or at least stabilise. So, although the property industry was largely overlooked by the Budget on Wednesday, there is a sense of “no news is good news” for the UK property market.
For more information and professional advice or for a free market appraisal of your property whether selling or letting, please contact your local Frost office.
