Over Labour’s 18-month tenure, its set-piece fiscal announcements have featured headline-grabbing housing policy – the pending mansion tax, the two per cent hike on property income tax, the abolition of non-dom status, the increase in social housing funding and the relaxing of planning law.
Other measures such as VAT on private school fees have made an impact on certain localised housing markets too.
However, this week’s Spring Statement will be remembered for the things the Chancellor did not say and the relevance of her silence to homes sales, house price movement, and mortgage deals this year.
‘If you have a fixed mortgage rate offer on the table – take it’
Mortgage advisor Alexander Hall reported in February that mortgage approvals had climbed continually over the last three years while estate agents operating in high-demand areas such as Walthamstow are seeing multiple offers and sealed bids.
The anticipation of an uptick in sales had been fuelled by the expectation that interest rates are going to continue to fall over the next 12 months.
Considering Rachel Reeves announced yesterday that inflation has fallen faster than predicted, this very much looked on the cards. How quickly things can change.
Since the US strikes on Iran, and the Islamic Republic’s response, oil prices have soared.
Importers such as Asia, Europe and the UK will be hit by higher prices and the longer the conflict goes on, and the more disruption to passage and supply, the higher energy prices will go.
This would mean interest rate rises too as the Bank of England battle to get inflation back under control.
“The conflict in the Middle East has lifted energy prices and shrunk central bank rate cut expectations. Market expectations of a near-term base rate cut, perhaps as early as this month, have now reduced and we could see lenders increase mortgage rates depending on how long this goes on,” says Mark Harris, chief executive of mortgage broker SPF Private Clients.
“Borrowers who need the certainty of a fixed-rate mortgage to help with budgeting and are planning on taking one out in the next few weeks or months may wish to secure a product now.
“Mortgage rates can usually be booked up to six months before you need one,” he adds.
London housing market in a holding pattern, again
Interest rate movement is only the latest in a stream of reasons making potential buyers pause.
Many stalled last year to get through the November Budget. This year many buyers are waiting for more stock to be launched in the spring market and for more favourable mortgage repayment rates.
News of global instability and the impact that may have on energy prices, inflation and therefore the cost of living may well put the London housing market into a holding pattern once again, explains Jeremy Leaf, former chairman of the Royal Institution of Chartered Surveyors.
“Much will depend on the length of any disruption and the potentially negative impact on energy prices and inflation. In those circumstances, any delay in the level and pace of anticipated base-rate reductions is likely to prompt buyers and sellers to press the pause button at least until a closer direction of travel becomes apparent,” Leaf says.
Rob Anderson, research director at Centre for London, adds: “London is the most globalised city in the UK and one of the most globalised cities in the world. So international macro forces do impact London’s housing market.”
UK unemployment its highest in a decade
As well as skirting around the potential impact of the Middle East conflict on UK inflation, there were other worrying references dropped into what was described by the Shadow Chancellor as a “surrender statement”.
Reeves said gross domestic product (GDP) will now grow “slightly slower in 2026” than forecast at the November budget but will increase by more than was expected in 2027 and 2028.
Of course, escalating and open-ended conflict in the Middle East could mean the downgrading of this longer-term forecast too.
The Chancellor also said unemployment is set to peak later this year, after already rising, but will fall from 2027-2030, ending 4.1 per cent lower than it was in 2024.
Anderson says unemployment is at its highest for a decade and that unemployment in London – due to its reliance on struggling sectors such as hospitality, tourism and retail – could be higher than the rest of the UK.
This, along with general concern about the lack of economic growth and the jobs market, feeds into inertia in the housing market with buyers hesitant to commit to such an enormous, life-altering purchase.
Are the Dubai boomerang buyers back?
Price drops in prime central London (PCL) have been one of the factors dragging on London’s property market recovery.
Savills data released in January revealed a 25 per cent fall in agreed deals on homes worth more than £1 million in the 12 months to November 2025.
Prices in central London fell 4.8 per cent across 2025 as a whole.
Muted activity was explained by missing international buyers who have left the country due to the hostile tax stance by the Labour government.
Over the weekend many of London’s high-end property agents and advisers spoke out, flogging the message that high net worth individuals are fleeing Dubai and Abu Dhabi and heading back to the luxury core of the UK capital.
Becky Fatemi of Sothebys International Realty in central London is more measured.
She says Middle Eastern buyers were already back in town. “Last year we saw a pause in activity with international buyers fearful of more anti wealth policy in the [November] Budget. This did not happen and from then we saw more Middle Eastern buyers return. In fact, the time to buy, for reduced pricing, was then,” she says.
“I am not seeing buyers pulling out of their Dubai deals but they are questioning being there full time, and many have decided to keep their base in London instead of selling it.
“London is still seen as a safe space and compared to the likes of Singapore and the US it is easy to get in and out,” she adds.
It’s not all doom and gloom
This Spring Statement was not trailed as a major fiscal event and there is a stability created by a lack of change.
“It is positive that we didn’t see a repeat of the damaging uncertainty that preceded last year’s Autumn Budget. And the Chancellor was right to reiterate the positive steps the Government has taken.
“These include abolishing the two-child benefit limit, which will help tens of thousands of children in the capital, and reforms to the planning system, which should help build more homes for Londoners,” says Anderson.
Reeves also made the right noises – if you are a housebuilder or a first-time buyer.
She referenced “more affordable housing” and helping “the builders not the blockers” although did not put any detail behind these sentiments.
As Anderson puts it: “The [housebuilding and homebuying] system in London is locked because we cannot build homes cheaply enough to sell at prices that people can afford.”
But there are indications that the Government realises this and is forming a plan behind the scenes.
Only last week the Chancellor met with the leaders of 13 building societies to discuss how lenders can help wannabe first-time buyers become homeowners, while one medium-sized developer in the southeast met with a representative in Number 10 to discuss a replacement Help to Buy product.
On the flipside, the void of activity that was the Spring Statement is creating quite the wishlist ahead of the Autumn Budget.
“Looking ahead to the Autumn Budget, which is the Government’s big opportunity for policy change this year, we would like to see stamp duty properly looked at.
“The current bandings have not kept pace with house prices and as a result less than half of homes in England are now stamp-duty free for first-time buyers,” says Colleen Babcock, property expert at Rightmove.
While lack of reform in the Spring Statement compounds the housing affordability crisis in London, expectations are certainly building that the Autumn Budget may finally bring some solutions.