Spring Budget Predictions 2025: What Can We Expect?

UPDATE: The Budget Is Live – What Was Unveiled?

This year’s Spring Budget, initially anticipated as a minor financial update, has proven to be a significant economic statement with notable implications for the property and investment sectors.

The Office for Budget Responsibility (OBR) has revised its economic growth forecast for the year downwards, from 2 per cent to 1 per cent, a factor that could influence investor confidence and market activity.

While measures to cut the government welfare bill and administrative budgets may have broader economic impacts, the most direct impact on property comes from the Chancellor’s announcements regarding housing.

Crucially for the sector, a £2 billion grant has been allocated to build thousands of new social and affordable homes. The Chancellor specifically vowed that 18,000 new homes will be built, hailing this as the “biggest boost to social and affordable housebuilding in a generation.” This commitment signals a significant government focus on increasing the supply of affordable housing, which could present opportunities for investors in this specific segment.

While acknowledging that the initial manifesto pledge of 1.5 million homes is unlikely to be met, the government now aims to oversee the building of 1.3 million new homes in the next five years, projecting an output of 305,000 homes a year by the end of the decade. This revised target, while slightly lower than initially hoped, still represents a substantial pipeline of new housing development with potential for investment across various segments of the property market.

These key updates from the Spring Budget will undoubtedly shape the landscape for property investment in the coming years. Continue reading our original predictions below for further context and analysis.

Spring Budget Predictions 2025: What Can We Expect?

The UK property market, a cornerstone of investment portfolios for many, is bracing for potential shifts as Chancellor Rachel Reeves prepares to deliver the Spring Budget on March 26th. For property investors, understanding the possible implications of this budget is crucial to navigate the evolving economic landscape and make informed decisions for the future of your portfolio. For those looking to prepare, Centrick Invest is here to help you stay ahead of the curve – here’s what we know about the budget, and our Spring Budget predictions thus far.

Economic Headwinds and Fiscal Tightropes

The upcoming Spring Budget arrives at a complex juncture for the UK economy. While not shrinking, economic growth remains sluggish, with the economy expanding by a mere 0.1% in the last quarter of 2024. Simultaneously, inflation persists at 3%, exceeding the Bank of England’s 2% target and is projected to climb further as 2025 continues, although speculations suggest that inflation will ease back to 2% by 2027. This inflationary pressure directly impacts interest rates, with the Bank of England base rate currently sitting at 4.5%, influencing borrowing costs for mortgages and returns on savings. Although the base rate has been cut this year, it still remains high compared to the pre-Covid period where rates sat below 1%.

Adding to this domestic picture, global uncertainties and events are indirectly impacting the UK. These factors have collectively created an environment where government borrowing costs are rising. The Institute for Government notes that this has significantly altered the economic landscape since the Autumn Budget, presenting Chancellor Reeves with a challenging fiscal situation. So, with this in mind, what can we expect from the 2025 Spring Budget?

Budgetary Constraints and Potential Measures

Chancellor Reeves has committed to fiscal rules, including not borrowing for day-to-day spending and reducing debt as a share of national income. However, reports suggest that the Office for Budget Responsibility’s (OBR) forecast may reveal that the financial buffer previously in place to meet these rules has been eroded. This economic reality puts pressure on the Chancellor to make some potentially difficult choices.

While ruling out tax rises, reports indicate the Treasury is considering spending cuts, with welfare budgets potentially being targeted. For the property market, government spending cuts can have indirect effects, influencing overall economic confidence and potentially impacting demand in less affluent areas. 

Spring Budget Predictions and Property Market Implications

Beyond spending cuts, speculation surrounds other potential announcements that could directly or indirectly affect property investment:

ISA Reform

Rumours suggest a possible reduction in the £20,000 tax-free annual limit for cash ISAs. The intention is reportedly to encourage investment in other asset classes, including stocks and shares. While not directly targeting the property market, such a move could shift investment flows, potentially impacting demand in other asset classes, including property over the longer term. It’s important to note that ISAs can also be used for property investments through specific vehicles like Lifetime ISAs for first-time buyers, or through investment ISAs holding property funds. Any changes could alter the attractiveness of these options.

Mortgages and the Housing Market

The current economic climate and any budget announcements will inevitably influence the mortgage market. Inflation remaining above target could delay potential interest rate cuts by the Bank of England. Higher interest rates directly impact mortgage affordability, potentially cooling buyer demand and influencing property prices.

For investors, understanding the direction of interest rates and mortgage availability is paramount. If the budget signals measures to tackle inflation effectively, it could pave the way for future rate reductions, which would be positive for the housing market. Conversely, if the budget is perceived as insufficient to curb inflation, or if it introduces new uncertainties, it could lead to continued higher rates and a more cautious property market. 

One area that’s worth considering in all the speculation remains that of affordability – ultimately amid uncertainty rental trends continue to grow – as the ceiling for first-time buyers and those moving out of rental accommodation continues to shift. Investors considering property can be buoyed somewhat by the continued demand for quality homes across the UK. 

Navigating Spring Budget Predictions: Expert Guidance is Key

The Spring Budget 2025 is poised to be a significant event, potentially setting the tone for the UK economy and the property market for the year ahead. For property investors, staying informed and prepared is crucial. Understanding the nuances of the budget announcements and their potential impact on property values, rental yields, and mortgage conditions is essential for making sound investment decisions.

Don’t navigate these shifting sands alone. At Centrick Invest, our team of property investment experts is closely monitoring the situation and is ready to help you understand how the Spring Budget could affect your property portfolio and investment strategy.

Get in touch with Centrick Invest today via the form below for expert guidance and to prepare your property investment strategy for the upcoming Spring Budget.