Property Market Slumps: Double-Digit Drop in House Prices

Housing Costs Crash: Record Annual Drop in a Decade

As a result of increased mortgage rates and general living expenses, home prices in the United Kingdom dropped by 1.1% over the course of a year ending in February.

According to Nationwide, this was the first annual decline in property values since November 2012, with the exception of a small drop that occurred at the beginning of the pandemic.

Additionally, prices decreased on a monthly basis, with a decrease of 0.5% since January.

Real Estate Markets Plunge: Biggest Drop in a Decade
Housing Prices Take a Tumble: Record Fall in 10 Years

The building society says, “It will be hard for the market to pick up much speed in the short term.”

According to the organization’s chief economist, Robert Gardner, “economic headwinds appear set to continue relatively strong, with the labor market widely expected to weaken as a result of the economy shrinking in the quarters ahead.”

In addition, he mentioned that mortgage rates were still “considerably higher” than the lows that were seen in 2021.

The current price of a typical home in the UK is £257,406, which is 3.7% less than its all-time high of £258,297, which was reached in August of 2022.

As a result of higher borrowing costs, buyers have been put in a more difficult financial position, which has led to a monthly decline in house prices for the past six months in a run, as reported by Nationwide.

The Bank of England increased interest rates throughout the course of the previous year in an effort to combat the skyrocketing cost of living. As a result, mortgage interest rates began to climb.

However, after Liz Truss’s mini-Budget in September drove the financial markets into turmoil, mortgage rates skyrocketed to approximately 6%. Since then, they have experienced a decline, but they are still significantly higher than levels that were closer to 1% in late 2021 when the annual decline in house values was the largest it had been in over a decade.

Also Read:  Boeing plans to cut 2000 jobs this year

Mr. Gardner forecasted that property values would drop by 5-6% from their peak in August 2022 to their trough, which he described as “feeling like a reasonably soft landing given the pressure on household finances.”

Nevertheless, he noted that the prediction was contingent on the labor market not weakening more than people anticipated it will.

‘Optimism in control’


According to Pantheon Macroeconomics, consumers are delaying the purchase of new houses because they anticipate further price declines in the housing market. The analyst believes that over the next few months, home values will drop to a level that is approximately 8% lower than their all-time high.

According to the report, mortgage rates appeared to have “hit a floor for the time being,” but the actual disposable incomes of households would be “squeezed again” in April as a result of the government’s decision to stop subsidizing households’ energy bills.

In addition, it stated that it had “tentatively penciled in a 5% increase in house prices for 2024,” citing its belief that the Bank of England will begin to reduce interest rates in the coming year.

According to Capital Economics, the continued decline in house prices during the month of February will “keep optimism based on reports that demand has recovered in control.”

“In point of fact, even if buyer volumes have recovered, the amount that they are able to spend on a new house has been reduced as a result of higher mortgage rates.”

Total
0
Shares
Leave a Reply

Your email address will not be published. Required fields are marked *

Prev
China Condemns US TikTok Ban on Federal Devices as “Unjustified”
US TikTok Ban Brings Backlash from China

China Condemns US TikTok Ban on Federal Devices as “Unjustified”

After federal employees were told to delete the video app TikTok from

Next
YouTube Accused of Breaking UK Child Data Privacy Laws
Privacy Breach? YouTube Accused of Gathering Data on UK Children

YouTube Accused of Breaking UK Child Data Privacy Laws

People have said that YouTube collects information about what children under 13

You May Also Like