UK home asking prices rise, tax cuts to spur demand

Asking prices for British homes advertised rose solidly this month and last week’s cut to property purchase tax announced by finance minister Kwasi Kwarteng could fuel demand further, property website Rightmove said on Monday.

Prices rose by 8.7 per cent in annual terms after an 8.2 per cent increase in August, with the average asking rising to 367,760 pounds ($399,240), Rightmove said.

Britain’s housing market had been showing signs of cooling after a more than 20 per cent surge in prices since the start of the pandemic, as the cost of living rises and the Bank of England steadily raises interest rates.

But last week Kwarteng announced an immediate cut to the “stamp duty” tax on home-buyers, part of a wider plan to boost economic growth that was received poorly by financial markets.

“Friday’s announcement is likely to stimulate some more demand (in the housing market),” Rightmove director of property science Tim Bannister said.

“If it does lead to a big jump in prospective buyers competing for the constrained number of properties for sale, then it could lead to some unseasonal price rises over the next few months.”

Rightmove’s index of asking prices, which is not seasonally adjusted, typically falls in November and December.

Kwarteng’s move to raise the transaction threshold at which stamp duty kicks in, to 250,000 pounds from 125,000 pounds, means a third of all homes currently for sale are now completely exempt in England, Rightmove said.

($1 = 0.9211 pounds)