Property agents around the country have predicted house prices will decrease by at least 10% within the next year. It’s a staggering claim and one that certainly scares homeowners and buyers alike. This hasn’t been totally unexpected, however, as new interest rate hikes (made by the Bank of England,) sent the industry into a tailspin. So, what does it mean for the market, homeowners, and buyers?
There is a real belief among property agents that the number of people buying homes will drop considerably compared to previous years. First-time buyers are being quickly priced out of the market and the reality is grim for some. Since interest rates spiked, mortgage fees have increased substantially. It means monthly payments will be higher than first estimated and buyers might no longer be eligible for a mortgage because of the extra financial burden.
For example, a standard mortgage costs £578 per month. With the new interest rates, the new mortgage payment stands at £847. It’s a substantial difference and is too expensive for buyers. A predicted 10% decrease in house prices isn’t the only reason for the downturn in sales. Soaring costs across the board are putting off buyers. Fortunately, the market should return to some ‘normality’ within two years, if not sooner.
People are reluctant to purchase a home because the market is so unpredictable. Property agents are right to be concerned. There are even some predicting a 20% decrease could be on the cards. While most rubbish this claim away, the property market is difficult to call, and every economic decision made by the government has repercussions. It’s easy to see why property agents have voiced their concerns about the predicted decline in house prices.
There are also predictions that property prices will rebound after a year or so and will be stronger than ever. If that were to happen, the slump in house prices should dissipate. Property agents are confident prices will rebound after the downturn, but certain things have to happen first.
For instance, interest rates must come down, and so must inflation. That may then ease pressures on the cost of living and help mortgage prices become affordable again. It does seem a long way off, but it will happen eventually.
The unfortunate reality of the 10% decrease in house prices is that people still have to buy and sell homes now. Not everyone can wait for the markets to rebound. Property agents are, however, looking at ways to make homes more affordable for buyers and get maximum returns for sellers. It’s not an easy balance, to say the least.
The country enjoyed a fairly stable property market for many years, and the recent turmoil in government and the cost-of-living crisis caused widespread panic. Markets couldn’t keep up with demand, and costs soared. It does seem as though, for the next year property prices will fall by at least 10%. Fortunately, property agents predict prices will increase once inflation and interest rates reduce.
