Sarah Grove, Head of Heritage Explorer UK on the Autumn Budget 2024

Despite only making its way into speech in the final quarter, the abolishment of stamp duty for first time buyers has understandably held headline sustenance. Though the Chancellor is not known for surprise announcements, this may have rendered the speech far more exciting than expected. And at surface level, the initiative may offer millennials a glimmer of hope.

But in reality, the abolishment will only serve those who are already in a position to purchase a home - the small fraction of individuals who have managed to scrape together a deposit (against stagnant wage growth), and have the income stability to take out a mortgage. But for others, the change may seem like a mere chip off the top of a mountainous climb. The OBR (Office for Budget Responsibility) suggested on Wednesday evening that the stamp duty cuts for first time buyers would actually raise house prices - benefitting existing landlords, but pulling homeownership further away from renters. But as an asset class that has experienced an average monthly change of +0.3% between November 2015 and October 2024*, drawing direct conclusions between cause and effect could be difficult.

There are still only a few rungs onto the housing ladder, all of which seem to linger at the top. I believe more homes need to be built in order to lower the barriers to home entry.

The Chancellor’s allocation of £44 billion over the next five years to support building more homes (of which £15.3 billion is new money) - with the intention of delivering 300,000 new homes a year by the mid-2020s, is a great start. Research suggests that it would bring home building up to the highest rates since the 1970s. For context, the number of permanent dwellings completed between 2015-2023 across the UK was 174,520. The figure hasn’t been above 200,000 since 2007-2008.** In my opinion, aiming for 300,000 is a necessarily ambitious step towards fixing the housing crisis.

In theory, increasing supply will alleviate pent-up demand and even out house prices - or perhaps at least slow growth so that younger generations can catch up. However, building homes requires a lot more than just money - as the Chancellor acknowledged. The £34 million set aside to develop construction skills across the UK shows an appreciation and understanding of the home building process, but will it be enough? Earlier this year, the UK housing white paper offered support in line with this initiative in providing small builders with a £3 billion fund to build more homes.

The gap between the number of planning permissions granted and the number of houses built is notably significant according to the Chancellor. While a review into the gap is set to shed some light on the situation, time will be the best indicator of action taken. Again, in this year’s housing white paper, the Government announced that developers would now need to start building 2 years after receiving planning permission, as opposed to the previous 3-year deadline.

From another perspective, while the Government seems to be supporting the younger demographics in the hope to meet affordability targets, some may argue that the industry which facilitates the home moving service is not being supported. This argument would, of course, take root in the recent abolishment of tenant fees imposed on letting agents.

The Chancellor’s announcements have, however, offered a sense of hope in devoting a healthy portion of time, money and practical solutions to the housing market. It will be interesting to see the way in which market sentiment responds in the coming months, and track the progress of home building across the country.

Written by Sarah Grove, Head of Heritage Explorer UK

*Nationwide’s UK Monthly Indices (‘Post 91), calculated as the average of seasonally adjusted monthly changes between November 2015 and October 2024.

**ONS: Table 208


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