With property in Reeves's sights, expect market chaos

Homeowners deciding to stay put rather than selling up is only the latest bad news for the chancellor, says James Moore

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The housing market has sprung a late-summer surprise, with lender Nationwide finding a chill blowing through it. If you're a seller and that makes you sad, buckle up. This might only be the start of your problems.

Let's look at the headline numbers first: the lender's index recorded a surprise fall of 0.1 per cent on the month; economists had predicted a 0.2 per cent rise. The average price is still up by 2.1 per cent on the year, to a seasonally adjusted £271,079, although the rate of increase has fallen. The July average was 2.4 per cent higher than in July 2024.

Despite the market's apparent cooling, Nationwide chief economist Robert Gardner said affordability remains “stretched” compared to long-term averages. Interest rate rises mean that the cost of servicing a mortgage is three times what it was during the pandemic. The typical first-time buyer property with a 20 per cent deposit faces monthly payments equivalent to around 35 per cent of their take-home pay, well above the long-term average of 30 per cent at a time when there are cost of living pressures across the board.

So should would-be buyers sit and wait for further falls? Well, the gorilla in the room is a Budget that's probably going to feel like spending a week in an ice bath. Property is firmly in the chancellor's sights. Note to Angela Rayner, with her new seaside home: this is going to hurt.