Sign In  |  Register  |  About San Rafael  |  Contact Us

San Rafael, CA
September 01, 2020 1:37pm
7-Day Forecast | Traffic
  • Search Hotels in San Rafael

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

UK House Prices Will Continue to Plunge in 2023

By: Get News
UK House Prices Will Continue to Plunge in 2023The real estate prices that began their sharp climb in the early days of the pandemic are now free-falling; cost-of-living crisis and rising inflation are partly to blame.

The real estate market in the UK started on a high last year, continuing a period of fast expansion that began early in the COVID-19 pandemic, thanks to low-interest, “race for space” rates and stamp duty land tax cuts throughout lockdowns. 

But the mood changed drastically in the second half of 2022, making buyers reevaluate their moving plans. 

What a difference a year has made! 

According to a report published in City Monitor, UK house prices are forecasted to continue plunging this year after a record-high fall of 2.3% in November 2022. Analysts unanimously agreed that 2023 is set to face the biggest slump in property prices since the onset of the financial crisis in 2008. 

“Although a housing market downturn was widely expected by economists (including us), the monthly drop in the December survey far exceeds our and consensus’ expectation,” said Kallum Pickering, the chief UK economist at Berenberg.

Reasons behind the recent drop in house price in the UK

The increasing cost of living and the rising inflation rate looming over the UK are two key factors contributing to the rapid cooling in buyer demand and sales activities.

City Monitor marks the recent hike in mortgage rates as another leading player that caused sales to slip to a 12-year low.

The result: the UK property market is anticipated to fall staggeringly in 2023.

Research is frequently being conducted on the extent and impact of this decline in house prices. Case in point: The Nationwide Building Society projects a 5% fall in price that can be as high as 30% in the worst case scenario. Oxford Economics and Capital Economics forecast this drop to be around 12%. On the other hand, Halifax predicts a decline of 8% in house prices in 2023. 

Impact of drop in house price in the UK

The recent decline in house prices will affect people planning to relocate. The reason: sellers may not put their properties on to the market for sale, finding it less profitable.

In addition, if the current hike in interest rate shows no signs of dropping, a huge percentage of people will have to shift from fixed-rate mortgages to new higher rates. More and more property owners will end up selling their houses if they fail to afford the inflated mortgage rates.

That said, the current housing market downturn has benefits and drawbacks as well. While first-time buyers will find and purchase property at a more reasonable price, homeowners will face substantial losses or even negative equity while selling their properties.

The role of high interest rate in the house price drop

In an effort to check the current inflation, the Bank of England increased the UK base rate by 0.5 percentage points to 3.5% in December 2022—the highest in the past 14 years.

However, an increase in the interest rate doesn’t necessarily result in decreased house prices. But if the rate stays high for a long time, it can make property prices fall sharply. 

The reason: persistently high interest rate makes people less interested in borrowing which negatively impacts the property market. 

London’s luxury houses are defying UK’s home sales slowdown

Even though the UK’s property market is witnessing abrupt changes this year, it’s still not playing out in London’s luxury property market.

“In 2022, sales of £5 million plus homes, which account for just 8 percent of the prime London housing market, were 63 percent higher than their pre-pandemic average,” said Anthony Payne, managing director at LonRes. “It’s not surprising, therefore, that it tempted would-be sellers to put their homes onto the market.”

With London’s expensive and luxury homes defying the current slowdown in the UK’s property market, real estate agents are expecting a ‘burst of activity’ this year in London.

In addition, the weakness in the pound against the dollar is luring more international customers to London’s luxury properties.

For example, being superbly connected to Central London, Blackfriars and Marylebone have become two of the most sought-after places to settle down. 

In such a case, a high-end luxury real estate company can help buyers, sellers, tenants, and landlords make the most profitable deal. 

A top-tier real estate agent has extensive market knowledge, professional networks, and excellent negotiating skills. They can efficiently find the property worth selling, purchasing, or even renting for their potential clients. For example, while a real estate agent ensures efficient property valuation on behalf of a seller, they help buyers figure out the best-asking price. 

Regardless of the transaction taking place, a high-end real estate service always considers their clients’ interest and offers the best services, locations and connections when it comes to selling luxury properties in the neighbourhood areas of London.

Wrapping up

The hike in mortgage and interest rates had a knock-on effect on home sales and demand. Even worse, the UK base rate is projected to increase further and peak at 4.25% as the BoE looks to bring back down inflation. It will be the tenth time in a row for the bank to hike the interest rate since December 2022. However, as part of an effort to repair the damage, lenders have started lowering the mortgage rate even though the base rate is going up.

Media Contact
Company Name: Geeky News
Contact Person: Press Officer
Email: Send Email
Phone: +44 (0)203 800 1212
Address:Parallel House, 32 London Road
City: Guildford
State: Surrey
Country: United Kingdom
Website: https://www.geekynews.co.uk/



Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 SanRafael.com & California Media Partners, LLC. All rights reserved.