by Rosie McLean 
Market impact
So, what does it all mean for the housing market and where might it go next? The implications are mixed. Interest rate cuts and low inflation show that measures to control the economy are working, for now at least. They also provide extra confidence amongst buyers and sellers alike, something that had already been witnessed with a stronger-than-expected start to the autumn housing market.
Lower interest rates and stable inflation will be welcomed for the confidence boost they provide and the hope that mortgage rates will begin to fall as a result. Affordability is a big issue for consumers but was also a challenge that Rachel Reeves attempted to tackle in her budget, the first delivered by a female chancellor.
Affordability measures
Her affordability measures included increases and changes to benefits and eligibility, a freeze on fuel duty for next year and increases in the National Living Wage which will mean more money each month for lower-paid workers. The National Living Wage has increased by 6.7% for those over 21 and by 16.3% for 18-20-year-olds.
The proposal to make the mortgage guarantee scheme a permanent fixture should help first-time buyers who might be struggling as a result of the increased stamp duty charges they will face next year. The government will consult with industry and announce further details of how it plans to implement the scheme, which allows lending at a 95% loan to value, at its next spending review.
Improved availability
Longer-term, the availability of homes should also increase which will ease pressure on a market where a lack of supply means that multiple people are currently chasing the same property. The government has already announced its £5 billion plan to deliver 1.5 million new homes over its time in office but added a further £500 million to the pot in the budget to focus on the delivery of further affordable housing.
But stamp duty will be costly
But affordability will be tested by stamp duty rises. Those buying second homes or buy-to-let properties have faced the most immediate impact. The rate on such properties rose the day after the budget from 3% to 5%, coming as a surprise to landlords in particular.
Other buyers will face higher stamp duty charges from next April. Stamp duty thresholds were previously frozen in Autumn 2022 but expire at the end of March. Since there was no mention of an extension by Rachel Reeves in the budget from April stamp duty will now be due from £125,000 rather than £250,000 previously. The threshold for first-time buyers, meanwhile, will fall from £425,000 to £300,000.
