UK property market and business confidence collapse ahead of Reeves’ November Budget

Britain’s property market lost further momentum in September, while business confidence collapsed to its lowest level in three years, amid growing concern over Finance Minister Rachel Reeves’ upcoming budget.

The RICS house price balance improved slightly to -15 from -18 in August, indicating fewer surveyors reported price falls, although buyer demand and agreed sales remained weak for a third consecutive month.

• RICS analyst Tarrant Parsons said market sentiment remained cautious, with uncertainty over possible tax measures in the November 26 Budget weighing on activity.

Reports suggest Reeves may seek new housing-related tax measures to meet his fiscal goals. Economists have also linked the recent drop in Halifax’s house price index to pre-budget jitters.

In the rental market, landlord registrations fell to their lowest level since 2020, while tenant demand remained firm, pointing to rents rising by around 3% over the next year.

Another ICAEW business survey found that business confidence had deteriorated sharply, with 60% of businesses citing tax pressure as a growing challenge.

• The institute warned that falling confidence, weak domestic demand and rising employment costs threaten the modest growth needed to stabilize public finances.

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Thoughts on Market Impact:

• FX: Growing fiscal uncertainty and weak real estate data could weigh on the pound.

• Rates: Weak sentiment could reinforce expectations of slower BoE tightening or earlier rate cuts.