Labour’s first 18 months have brought major housing reforms from the upcoming mansion tax and higher property income tax to the abolition of non-Dom status and planning changes. But this week’s Spring Statement stood out for what the Chancellor didn’t say, leaving buyers and lenders searching for clues on the outlook for prices, sales and mortgage rates.
London had shown early signs of recovery, with mortgage approvals rising for three consecutive years and agents in areas such as Walthamstow reporting multiple offers. Falling inflation had strengthened expectations of interest rate cuts until geopolitical tensions shifted the picture.
Oil prices have surged following US–Iran escalation, raising the risk of renewed inflation and delaying expected rate cuts. “Market expectations of a near-term base rate cut have reduced, and we could see lenders increase mortgage rates depending on how long this goes on,” said Mark Harris of SPF Private Clients. Borrowers needing certainty may want to secure fixed-rate deals now, he added.
The uncertainty adds to a growing list of reasons buyers are pausing. Many delayed decisions ahead of last year’s Budget, and this spring they are waiting for more stock and improved affordability. Analysts warn that London’s global exposure makes it particularly sensitive to international shocks.
The Chancellor also confirmed slower GDP growth in 2026 and rising unemployment this year, with improvement expected from 2027. London reliant on hospitality, tourism and retail may face higher joblessness than the rest of the UK, further dampening buyer confidence.
Prime central London remains a drag on the wider market. Savills data shows a 25% fall in £1m-plus transactions and a 4.8% drop in PCL prices last year, driven partly by the retreat of international buyers. Some agents report renewed interest from Middle Eastern buyers, though others say the return began quietly after the November Budget.
Despite the lack of new measures, some welcomed the stability. The Government highlighted the abolition of the two-child benefit limit and planning reforms, while signalling support for affordable housing and first-time buyers. Ministers have recently met building societies and developers to explore new routes onto the housing ladder, including potential successors to Help to Buy.
Attention now turns to the Autumn Budget, where industry figures are calling for a full review of stamp duty. With thresholds far out of step with house prices, fewer than half of homes in England are now stamp-duty-free for first-time buyers.
Expectations are rising that the Government’s next fiscal event may finally deliver the reforms needed to unlock London’s stalled housing market
Source The Standard
