Liam Bailey, global head of research at Knight Frank, said nervousness over the upcoming Budget was fueling “inertia” in the property market.
Chancellor Rachel Reeves will unveil her budget on November 26, which is rumored to include a number of housing reforms.
These include scrapping stamp duty for buyers and replacing it with one for sellers of homes worth more than £500,000, ending the capital gains tax exemption for main residences above a certain threshold and extending national insurance to cover rental income.
Citing the October Royal Institution of Chartered Surveyors (RICS) housing market survey, Bailey said that with the Budget approaching, “more homebuyers tend to sit back and wait for clarity”.
He added that the RICS new buyer inquiry indicator had fallen to -24%, the lowest reading since April, meaning the Treasury was receiving less stamp duty revenue.
Bailey continued that this “only highlights the strange decision to put so many tax options on the table this summer”.
The latest Royal Institution of Chartered Surveyors (RICS) report quotes estate agents as saying budget concerns have fueled “inertia” and “a sense of nervousness”, while the market feels “stagnant”.
In a trading update published this week, housebuilder Persimmon also noted that there had been “some softening in the market since the summer, with consumer confidence affected by ongoing uncertainty, including the upcoming government budget”.
According to the latest figures from Knight Frank, more than 100,000 rental homes have been fully planned but have not yet started construction.
Mr Bailey said it was still uncertain when many of the apartments would be built, with the number of apartments under construction down 8 per cent from a year ago.
“Regulatory hurdles and high costs continue to hinder construction, especially high-rise apartments,” he added.
“Many developers are unable to proceed due to site economic unviability or delays in the Gateway process. Official figures show it now takes an average of 36 weeks to gain approval for Gateway 2. Uncertainty over the Gateway 3 timetable further complicates project viability.”
