The Spring Statement and what it means for your Richmond Borough Property

Cuts, Taxes and Affordability

Although this week's Spring Statement was very much billed as being ‘not a Fiscal Event’, the narrative coming from Westminster over the preceding days and weeks had paved the way for cuts to public spending. 

Rachel Reeves cited that ‘the world is a different place’ today than in October, as benefits cuts were ushered in, mainly affecting individuals and families receiving personal independence payments (or ‘PIP’s). 

Whilst the 3.2 million families this affects aren’t necessarily those who prop up the property market, particularly here in Richmond Borough, there can be a knock on effect from it – unless, of course, the purpose behind cutting the PIP is borne out, and those people find their way back into work. That will remain to be seen.

The big difference in the world that Reeves didn’t utter aloud, but was referring to, is that the USA now has a Trump government, and his threat of tariffs is likely to reduce GDP and treasury income (and indeed, a mere few hours later the same day, 25% tariffs on automobile imports into the USA was announced). Having previously pledged not to increase taxes on working people, it felt inevitable that public spending cuts would be on the agenda.

The government did stick to that prior pledge on taxes – there were no tax rises ‘for working people’ announced yesterday –, but of course employers’ National Insurance does go up in April, as announced in October’s Budget address.

It is inevitable that the added burden on employers will be felt by employees, manifesting itself in reduced hours, delayed pay rises, and perhaps even redundancies and lay-offs. At the same time, businesses facing extra costs will undoubtedly raise prices, fuelling (don’t we love it?) inflation. 

All of which has an impact on general affordability – and that includes the affordability of property buyers.

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Planning Reform and Housebuilding

The government pledged to build 1.5 million new homes over the course of this five year parliament, and the reforms to the National Planning Policy Framework (NPPF) and a modernisation of Green Belt policies is perhaps set to make this a ‘near miss’… which is miles closer than successive governments have come since the late 1960s.

It is estimated that we will see around 1.3 million new homes over the period. At the same time, Reeves yesterday pledged an extra £2billion boost to building affordable properties, to further push this housebuilding agenda.

It is easy to take these things with a pinch of salt – but, in this case, the Office for Budget Responsibility (OBR) – an independent body that reviews government spending policies – has supported the claim, and has forecast that this housebuilding initiative will benefit the economy by adding 0.2% to GDP on its own – an economic boost of almost £7billion. 

What does this mean for the property market? It means a modest increase in property values for a start, which the OBR says will rise by 2.8% in 2025, then by 2.5% per year until levelling off and dropping a little – 0.8% – in 2029. By this point, housebuilding volume should start to impact property stock levels actually available.

The OBR also predicts a large increase in the volume property transactions, from 290,000 per quarter to 370,000 per quarter – an increase of 320,000 property sales per year.

Meanwhile however, mortgage rates are set to rise again, with the average mortgage rate peaking at 4.7% in 2028, and remaining the same until 2030. This is likely to affect the amount that households save – currently 6.25% of disposable incomes, but likely to fall to 3.35% by 2030. From a house buying perspective, this could mean less into deposits, which would tie in with the levelling off or potential decrease of property values by the end of this decade.

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I’m thinking of selling my home in Richmond, Twickenham or Teddington – should I do it now, or wait?

The economic climate always plays its part in the way the property market performs’. Not only are the two things inextricably linked, but the property market in itself is a major economic driver. Generally speaking, when the property market does well, the overall economy looks healthy – and that is why the lubrication of the planning and housebuilding system is quite exciting, from a market point of view.

It is also generally seen as positive for home ownership prospects, as more availability of property will slow down property price rises moving forward.

But we are not there yet.

The question of whether to move now in Richmond, Twickenham or Teddington, or whether to wait, should – we think – come down to your personal preferences. 

The market today is a little fragile, but overall it feels like it is coming out on the other side from what have been more uncertain times. 

Currently, we are looking at stabilising mortgage rates, and these are likely to be a bit higher in another couple of years – so that could be worth bearing in mind, considering the average property value in Richmond Borough is £786,000, according to the ONS, compared to £265,000 nationally. 

But realistically, the sort of property price growth being forecast over the next few years – 2.8%, 2.5%, 2.5%, 2.5% - is not very different from where inflation might be anyway. By and large there is not an obvious ‘value’ reason to move now, or in the next few years.

So let it be about purpose. Why do you want to move? What aren’t you getting from your current home? How will a move benefit you? Where will be the right location for you for this next period of your life?

These are all the questions we ask when we are discussing values with our sellers. Yes, we can help with bricks-and-mortar ‘value’ – but helping people understand the value to them in moving to one place or another place, that is the true delight doing what we do. 

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