Under new plans, a typical household will now pay no more than £2,500 a year from October for their gas and electricity. This figure is based on average yearly consumption. 

This energy price guarantee will last for the next two years, giving some comfort for those struggling to pay. 

Here we explore:

• How the energy price cap could boost affordability and keep existing deals together
• The wider implications of inflation-curbing policies 
• Whether UK house prices could continue to rise

Long term inflation fears

Financial markets are already feeling jittery about Liz Truss’s proposed support package for the economy, more widely. Tax cuts could stoke inflation, send interest rates higher and rack up debt, her opponents have warned.

The Bank of England’s chief economist, Huw Pill, has voiced his concerns with the plan, stating that, despite a short term reduction to inflation, it could embed high inflation in the long term. 

With inflation already in double-digits, the stakes are high and management of the economy will be the most critical issue for the housing market between now and the next election.

In other words, pay more attention to what the new chancellor says rather than the new housing minister.

How could the housing market respond?

If unemployment stays historically low, inflation doesn’t spiral further and we avoid the Bank of England’s prediction of a recession lasting more than a year, UK house prices should continue to rise modestly and transaction volumes will gently descend from the heights of the pandemic.

It is also worth noting what has been reported already when it comes to curbing the sky-high energy bills. Liz Truss ruled out a windfall tax on energy companies at her first Prime Minister’s Questions. 

Encouraging inwards investment is clearly a key plank of the government’s economic policy and proposed corporation tax rises will also be scrapped. This could be to the benefit of prime markets in London and the south-east.

Property market stimulation 

A support package designed to help households and businesses survive spiralling energy costs will likely have repercussions. 

It will help mainstream property markets more directly by keeping energy bills in check, but it will also reverberate up house-buying chains by holding existing deals together and boosting affordability.

Overall, the government appears to be in pre-election giveaway mode, which may encourage buyers and sellers to act between now and the next election in spring 2024.

Discover more

Subscribe to our newsletter get more expert analysis, comment and opinion on the residential property market.