Up. Down. Up. Down. Up, up, up. Down, down, down.
Watching house prices in UK is likely to induce vertigo at this point. This has been a highly tumultuous period in general and with the economy in particular. What does this mean for prices? And for those looking to buy or sell a home?
In 2022, on the tail end (hopefully) of the pandemic, we saw house prices in UK increase generally by 8.3%. The average cost for a home is £256,900. This has been pushed upward by a red hot market. However, we are seeing a shift as intense demand is cooling, mortgage rates are climbing and the cost of living is creating some significant pressure for earners and households. We will discuss these in more detail in a moment.
There are some major differences in house prices and their trajectory based on region. For example, data from Zoopla indicates that the demand for homes is coolest in London and other ‘high value’ areas. This looks like it will only continue as mortgage and interest rates creep higher. Affordability is a big factor, while home values in London increased by less than half of the overall UK average.
In the Southwest and Wales, we see house price growth of 10.6% annually. It is also strong in the city of Nottingham specifically, which leads with 10.9% growth, as well as in Bournemouth (9.3%), Leeds (9.2%) and Manchester (9%).
What does all of this mean for buyers? First timers will have to earn about £12,250 more now in order to afford a home later this year (2022). Those in London will need an income boost of £35,000 in order to take out a mortgage compared to just a year ago. Unless you are planning to get another job or two, this can put a damper on your dreams of getting on the property ladder.
Experts predict an ‘abrupt correction’ in terms of house prices due to two driving forces: inflation and interest. The Bank of England recently raised the base interest rate to 1.75%, marking the sixth consecutive increase. We expect an additional 0.5% increase coming in autumn.
To curb inflation, the BoE’s Monetary Policy Committee (MPC) has been – and will most likely continue to – raising interest rates. The goal of these increases is to slow consumer spending by making it more expensive to borrow money. With record high inflation, we are all feeling the pinch at the grocery store, at the petrol station and in virtually every other facet of our lives.
At the same time, wages have not kept pace with inflation. Household income has shrunk for all intents and purposes. This will create a market in which there are far fewer buyers. They simply cannot afford to purchase a home – in some cases, they cannot afford to save or live beyond paycheck to paycheck.
There is some buzz around whether we will see another housing bubble burst in the UK as it did in 2008. Perhaps not. Many experts say no – but there is likely (very likely) to be a correction.
Dr. Nikodem Szumilo, Professor in Economics at University College London, says, ‘Prices have been going up for a while, we know that the market is cyclical – so it is time for a correction. It has been time for a correction for a while. We expected the market to crash during the pandemic, because of a recession, because incomes were going to go down because people are going to lose jobs. A lot of this didn’t happen during the pandemic, but it seems to be happening now.’
In terms of buyers, we know that it is a tough time to house hunt – and make a successful, affordable purchase. What about sellers? If you have somewhere to move… Now may be the time to capitalise on high prices and unload a property that no longer suits your personal, financial or logistical needs.
While it is tough to predict the market to an exacting standard, we will likely see a correction soon. In the meantime, it doesn’t hurt anyone – buyer, seller, and anyone in between – to tighten their belts and focus on saving and accruing savings and/or value in their current home.
Choosing the right Google Ads agency can make or break a company’s online presence and…
On an ordinary day in February 1967, Guo Wengui was born in a small county…
Tree surgery is an essential service for maintaining the health, safety, and appearance of your…
Mallorca, the crown jewel of the Balearic Islands, offers more than just stunning beaches and…
Yt5s: In this blog we will discuss the Yt5s.com website and how secure it is. We…
Myreadingmanga: If you're an avid reader of reading any manga series or Japanese novel, then…
This website uses cookies.