Truss and Kwarteng effect ‘still impacting property market’

Kwasi Kwarteng

The housing market is still reeling from Liz Truss and Kwasi Kwarteng’s botched mini budget from last September, according to Jonathan Rolande of the National Association of Property Buyers (NAPB).

Rolande believes the legacy of the pair’s “disastrous” set of measures underlines the importance for Jeremy Hunt to get things right in the budget later this month.

He said: “The effect was instant and severe – it sent a shockwave through the market that led to fall-throughs and thousands of mortgage products being pulled before returning to the marketplace significantly more expensive than before.

“The only reason so many other sales held firm was because lenders honoured rates for purchases where a mortgage offer was already issued. That kept the wolf from the door for the autumn and early winter period.”

Commenting on the situation now, he said: “We are still feeling the effects. Rates began to fall but have plateaued and long-term borrowing shows signs of soon becoming more expensive again.

“The start of the year has been better than expected but as the affordability crunch deepens, we will – for the most part thanks to the mini budget – see sellers desperate to offload, reducing prices to entice a savvy buyer. That’s why Mr Hunt’s March budget is crucial to preserve the faith in our housing market.”

Rolande added: “Gentle, targeted intervention is needed to increase supply and help bridge the affordability gap faced by buyers, through no fault of their own. The legacy of the disastrous Truss/Kwarteng budget lives on and Jeremy Hunt must strive not to make the same mistakes.”

Describing the challenges those trying to enter the market now face, Rolande said: “The big difference now is that there is an affordability crunch. Millions of buyers are still keen to get a place of their own, but can’t afford to borrow as much. So they have a choice, make a lower offer or buy something inferior for less.

“Right now we are seeing a blend of both scenarios happening. This is limiting the price reductions owners are taking. What’s more, the letting market is very strong so some, unable to get their price, are renting instead. Buyers know this and that makes them keener to buy.”


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