It’s no secret that the property market in the UK is suffering greatly due to inflation and high-interest rates. Not to mention the cost of living crisis and what that could mean for mortgages. However, things are not remaining that gloomy from the pattern that we recently spotted.
Home sellers are currently reducing the asking prices for their homes. Although the property portal Zoopla showed only 11% of homes up for sale following this trend, it is easy to spot the 5% drop in the asking price of those properties. The question is, will this trend continue? Will the drop in asking price increase?
Put simply; there’s currently low demand to make an expensive purchase such as a home. This explains the 1 in-4 drop in the seller’s asking price, as noted by Zoopla, the property portal. People are afraid to spend their money with all the uncertainty around the recession and inflation.
This feeling of uncertainty accompanies house buyers during these difficult economic times and leads to 15% of cancelling a deal after the sale is agreed upon by both parties. What is the real cause behind this?
There isn’t just one single reason tied to the reduction in demand within the housing market. It begins with households squeezing their budgets to adapt to the cost-of-living crisis. Additionally, an increase in the Bank of England’s interest rate to 3%, the same significant increase during the 2008 economic crisis, is no pleasant indicator. In 2023, this trend in heightened Bank of England interest rates is expected to reach 4.75%!
This current increase in the interest rate and the predicted one would definitely not lure someone to purchase a property and pay a mortgage. The Office for Budget Responsibility (OBR) announced that house pricing is expected to fall by 9% in the coming two years until it starts rising again in 2025. As we face a prolonged recession, first-time home buyers might be impressed by the reduced prices, the mortgage rates impose a harsh reality that is worth considering amidst a cost-of-living crisis.
Well, now that you have all the facts straight, the choice is yours. However, we recommend you research and seek professional advice before making your final decision. Get in touch to book a consultation with us. We can help you understand your financial position and help you make an informed decision.
