According to expert forecasts, rising interest rates and the crisis in the cost of living threaten to trigger a sharp fall in property prices in Great Britain.
The property market has boomed over the past decade, with the price of an average UK home hitting a record £286,079 last month – up 1.1% on March.
And despite fears of a pandemic-driven property crash in 2020, prices have “skyrocketed” by around 20% over the past two years, creating a “new affordability crisis in the UK property market”, he said this is money. The gap between house prices and average wages is now comparable to what it was “just before the financial crisis” in 2008.
This continued rise against the backdrop of Covid shows that “the UK housing market is totally disconnected from economic reality elsewhere,” the said i news Apartment correspondent Vicky Spratt. She repeated “a question I’ve asked repeatedly,” adding, “How long can this go on and how concerned should we be?”
“Negative assessment of market prospects”
Although home prices continue to rise, the rate of growth is slowing, according to Halifax’s Monthly property price index. “With interest rates rising and inflation continuing to put pressure on household budgets, it remains likely that the rate of house price growth will slow through the end of this year,” said the bank’s chief executive, Russell Galley.
Amid growing concerns about the rising cost of living, said Neal Hudson, a real estate market analyst at consultancy BuiltPlace The guard that he is “more negative about the outlook for the market than at any time since the pandemic began.”
As banks begin to cut back on lending, the reduced availability of mortgages is already beginning to affect the market. “I could see four, five, six weeks ago that the volume of inquiries has gone down and transactions have taken longer,” said a north London estate agent The Telegraph.
“Not until 2026”
Corresponding The Independent‘s Sean O’Grady, a housing crisis is “pretty much inevitable” as the cost of living soars “against a backdrop of flat wage increases”.
But not everyone agrees. British economic commentator Fred Harrison – who accurately predicted the 2008 financial crash – doesn’t think house prices will fall significantly until later this decade.
“It’s going to be 2026, which is at the end of a 14-year house price cycle in an 18-year business cycle,” Harrison said MoneyWeek Podcast. “They’ll level off for a few months and then they start to decline.”
Though experts disagree on when and how severe the next crash will be, “home prices are almost certain to reverse at some point,” said The Telegraph’s deputy business editor Tim Wallace.
“Don’t Be Happy”
Even if home prices do fall in the coming months, cash-strapped first-time buyers shouldn’t “rejoice” so quickly, he said MoneyWeekis John Stepek.
If you’re looking for a new home, “you shouldn’t worry about the timing of the market; Nobody has a crystal ball,” he continued. “All you really have to worry about is making sure you can afford your mortgage when interest rates go up and that you’ll be happy in your new home.”
https://www.theweek.co.uk/business/956689/is-the-uk-heading-for-a-housing-crash Is Britain at risk of a real estate crash?