Home Top Global NewsMarkets House price crash: ‘Drop in demand’ to trigger sudden ‘slowdown’ in market – new forecast | UK | News

House price crash: ‘Drop in demand’ to trigger sudden ‘slowdown’ in market – new forecast | UK | News

by Ozva Admin

Interest Rates: Martin Lewis on the Effect on Mortgage Applicants

Earlier this month, the Bank of England raised its base interest rate to 1.75 percent as part of attempts to rein in spiraling inflation, which topped 10 percent in July and could hit 18 percent in January. of 2023. This is likely to reduce mortgage interest. higher and with household pockets under pressure, and with mortgage costs and prices on the rise, the current slew of home buyers is likely to plummet.

UK house prices have grown by 60 per cent in the last decade, so as the cost of living crisis puts pressure on finances, experts warn a dramatic recession is soon to come. .

Real estate firm Zoopla said the average UK house price rose 8.3 percent in the past year to £256,900, but industry insiders warned demand for new homes is weakening as as skyrocketing inflation, coupled with ongoing increases in mortgage rates, begin to take their toll.

Some are warning that Britain could soon be hit by a housing market slowdown in the latter part of this year before the start of 2023.

First-time buyers continue to drive the property market and account for more than two-thirds (177,000) of all UK property transactions.

house price drop warning

Falling house prices: A drop in demand could trigger a sudden ‘slowdown’ in the housing market (Image: GETTY)

house price drop

House price crash: Experts have warned a dramatic drop could be on the horizon (Image: GETTY)

But current interest rates and mortgage prices could mean they bear the brunt of these problems, with the average monthly mortgage payment rising by a fifth (£163) since the start of the year, to around £ 1,000 per month.

Zoopla research warns that rising interest rates will still have a knock-on effect on the housing market and could result in a slower pace of growth or even a drop in property prices.

Additionally, new figures from Rightmove showed a 13 percent increase in the number of sellers last month, injecting a much-needed boost into the real estate market.

However, more than half of the properties are still selling at or above final advertised sales price, and 98.9% of them are reaching final advertised sales price, meaning many sellers are still looking reduce your selling price to close deals at Christmas.

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british property market

Falling house prices: Experts have warned that the UK could be hit by a slowdown in the property market (Image: GETTY)

Simon Bath, CEO of iPlace Global, the makers of Moveable, warned: “The latest reports from Zoopla and Rightmove show clear signs that there could be a slowdown in property market activity towards the end of the year.

“Although this is likely due to the fact that many people are currently on vacation, rising mortgage prices could also be a driver of falling demand, especially for first-time buyers, many of whom they are really struggling to get on the ladder in the current market conditions.

“It’s fantastic that we’re starting to see an increase in the number of sellers, and we have proprietary research showing that nearly a quarter of millennials are now looking to buy a home to develop, not live in.

“Hopefully, this additional stock can further help curb rising prices over the next year, with less competition making it easier for first-time buyers to work their way up the property ladder.

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uk interest rates

House price crash: Bank of England Governor Andrew Bailey (Image: GETTY)

“However, the Government must also ensure that new schemes are created to replace old ones such as Help To Buy.

“With borrowing costs set to rise further, government assistance will be even more crucial to ensure everyone has a chance to climb onto the right ladder, even as prices continue to rise.”

Earlier this month, an expert warned that house prices are more likely to face a “sharp correction” rather than a gradual downward turn as inflation and high interest rates continue to weigh on what buyers can afford.

Nikodem Szumilo, professor of economics of the built environment at UCL, warned that it was “very clear the market is headed down” after a decade of growth, but insisted there were differing views on how quickly that decline would occur. .

However, after a stay of execution through the Government’s Covid measures in recent years, the housing market was more likely to face a “dramatic drop”.

house price drop

House Price Crash: A Map Showing Expected House Price Falls (Image: EXPRESS)

Dr Szumilo said: “Prices have been going up for a while, we know the market is cyclical so it’s time for a correction. It’s been time for a correction for a while.”

“We expected the market to crash during the pandemic, due to a recession, because revenues were going to go down because people were going to lose their jobs. A lot of this didn’t happen during the pandemic, but it seems to be happening now.” .

“The economic policies implemented by the Government delayed the loss of jobs, a recession and the increase in interest rates. But clearly they were not stopped. All of this is happening now, and this is likely to affect the housing market.”

He added: “It’s been a while since we’ve had a slow correction in the housing market in this country, so I think we may have a more drastic correction. Looking at how strong the market is right now, it’s hard to tell.” count.

“I think it’s very clear that the market is going down right now, because raising interest rates [and] Falling incomes often cause house prices to fall. And again, this is something that we predicted before the pandemic and the government was able to stop.”

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