Skip to content

Mortgage approvals fell to their lowest level in April since June 2020, according to the Bank of England. Jeremy Leaf, principal of Jeremy Leaf & Co, told The Financial Times: ’Successive monthly increases in the cost of living as well as interest rates [are] compromising confidence of households to take on additional debt.’

Four in ten people argue that stamp duty should be scrapped and replaced with a capital gains tax on homeowners’ profits, according to a new survey from removals firm Anthony Ward Thomas. Jeremy Leaf told Mail Online: ‘The most important consideration when contemplating any changes to the housing market is what will be the consequences for transactions. As it is, stamp duty thresholds have not kept up with inflation; the net result is that Government coffers have been swelled by the significant increase in transaction numbers over the past year, more than making up for the stamp duty holiday. The situation is likely to change now with the rise in cost of living having an impact on activity and transaction numbers. The Government is unlikely to want to compromise a nice little earner unless it can be shown that it might earn at least as much, or even more, by changing the current system.'

The housing market is showing signs of cooling, according to the Halifax. Jeremy Leaf told BBC News: ‘The cost of living crisis and successive interest rate rises are finally having an impact on the housing market. Prices are still rising but not as rapidly as they were just a few months ago and activity is cooling.'

Increases in the cost of borrowing are likely to have an impact on house prices. Jeremy Leaf told The Guardian: ‘Affordability calculations may be compromised, which could affect borrowing potential.’ However, he suggests that while this will slow demand and the pace of house growth it ‘won’t reduce prices, bearing in mind the continuing huge imbalance between supply and demand’.

Despite the fall in number of properties changing hands in May compared with the same period last year, HM Revenue & Customs believes that the UK’s property market is still going strong. Jeremy Leaf told City AM: ’Previous falls in sale numbers could partly have been blamed on shortage of stock but we are now finding, at the sharp end, a softening in demand prompted principally by the rise in inflation, as well as uncertainty as to when it will end. That lack of choice, combined with low unemployment and rising wages, mean no major corrections are expected.'

Land Registry figures show average house prices jumped by £31,000 in the year to April 2022. Jeremy Leaf told The Daily Telegraph ‘Price changes can reflect stock shortages as well as regional and house type variations, as reflected in this, the most comprehensive of all the market surveys. But its inevitable historic nature means it is not yet showing the softening in demand picked up by other reports over the past few weeks. We are seeing increased nervousness about taking on debt at a time when buyers and sellers have no real clue as to when and how the rising cost of living will start to level out.’ He explained further in The Evening Standard: ‘Nevertheless, continuing lack of choice and strong employment prospects means there is still little chance of significant price changes over the next few months at least.'