How Will the Spring 2023 Budget Affect the UK Property Market?

Last week, Chancellor Jeremy Hunt announced the UK Spring 2023 Spring Budget.

Covering topics from artificial intelligence to childcare and corporation tax, this budget offered various predictions and promises for the future of the United Kingdom.

With this new announcement, the property market in the UK is expected to be heavily affected.

Growth and Regeneration Expected in Key Areas

Regeneration is an integral part of the property market.

According to property company RWinvest, regeneration is a magnet for future growth and demand: resulting in amenities that improve the local area, which attracts new residents and boost property prices even further.

In his announcement, the Chancellor promised to further invest towards UK regeneration schemes.

From 2023, the government will now provide over £200m in funding to 16 high-quality local regeneration projects across the UK.

The report mentioned that the “left-behind places” cited in the government’s Levelling Up campaign and projects with costs under £10m would be specifically targeted to ensure a fast turnaround and smooth integration.

Additionally, Chancellor Hunt revealed the government would deliver 12 “investment zones” across the UK. Regions like the West Midlands and Liverpool were highlighted as potential candidates, with other locations given the opportunity to apply.

The Chancellor stated that to succeed, applicants must identify a location where a partnership between local government and local universities/research institutes could provide valuable innovation.

Those selected will receive around £80m in funding over the next 5 years to further encourage investment and strengthen local economies.

If all goes to plan, this could result in many investors and homeowners purchasing more homes throughout the country and a flourishing market.

Inflation Rates Should Fall

At the end of this year, inflation in the UK is predicted to fall by 2.9% – down from 10.7% in the last three months of 2022.

The Chancellor hopes that this will ensure that everyone will benefit from a more robust and stable economy by the end of the year.

Also, in the report, the Office for Budget Responsibility (OBR) suggests that the UK will avoid a technical recession, potentially experiencing consistent growth for every year of the forecast period from 2024 to 2027.

As a result, property prices will not rise unsustainably, allowing first-time buyers to save significantly more money when working towards a deposit for their home.

The Energy Price Cap Will Be Extended

After announcing an average energy bill increase, the government has decided to walk back on these plans, with the existing Energy Price Guarantee (introduced at the end of 2022) extended for a further three months.

This means the average yearly energy bill is expected to remain at £2500, instead of the anticipated rise to £3000.

This extension should save the average UK family an additional £160 in energy costs, alongside the existing support measures for energy bills.

This will, of course, be a considerable relief to homeowners and tenants and should massively assist in helping reduce the ongoing pressures of growing energy costs.