The UK property market is showing clear signs of a slowdown, with Home.co.uk’s monthly index reporting a sharp decline in asking rents and minimal growth in sales prices, coupled with record high levels of unsold stock.

Rental Market: Negative Growth Across the Board

• The annualised asking rent price is now $3.7\%$ below the rate recorded this time last year.

• All English regions, Scotland, and Wales are indicating year-on-year falls in average asking rent.

• Wales is the worst performer, showing a significant decline of $11.6\%$.

• In London, Kensington and Chelsea is the slowest lettings market (37 days on market), while Waltham Forest is the speediest at 12 days.

Sales Market: Buyers Gain the Upper Hand

• Oversupply is creating downward pressure on prices, with the total portfolio count for England and Wales at its highest November reading since 2013.

• The mix-adjusted average asking price for England and Wales dropped by $0.4\%$ in October, bringing the annualised growth figure to a mere $0.4\%$.

• Real Capital Loss: Monetary inflation is outpacing home price growth, leading to an estimated overall real growth loss of $-4.2\%$.

• Investor Exodus: There was a $7\%$ year-on-year surge in new property listings in October, suggesting many investors are “throwing in the towel.”

Budget and Interest Rate Uncertainty

The poor economic outlook, rising unemployment, and the expectation of tax rises on the wealthy (including potential reforms to inheritance, capital gains, and property tax) in next week’s Budget are eroding buyer confidence.

While a small cut in the Bank of England base rate appears to be priced into the 2-year swap rate for the December meeting, uncertainty surrounding both the Budget and interest rates is likely causing buyers to hold off, further contributing to the market slowdown.