Home prices begin to fall as recession looms in the real estate market
Home prices started to fall as the cost of living crisis and high interest rates hit the real estate market.
The median home price of £365, or 0.1%, has fallen in value over the past month after years of high growth, as experts warn that the property market has reached a tipping point, figures from Halifax Bank show. Home prices could fall by up to 10% over the next year, according to industry forecasts.
The annual growth rate slowed from 12.5 percent to 11.8 percent between June and July. The average cost of a home is £293,221, according to Halifax.
The Bank of England raised the bank interest rate for the sixth time in a row, from 1.25% to 1.75% to combat hyperinflation on Thursday, the fastest rise since 1995. This led to another increase in mortgage costs for millions of borrowers on a variable basis. rate of mortgages.
Russell Galley, of Halifax, said he expects home prices to come under more pressure in the coming months as higher interest rates and higher costs of living hurt household finances.
He said, “The leading indicators of the housing market have recently shown a slowdown in activity, while higher borrowing costs are increasing pressure on household budgets on the back of exceptionally high home price-income ratios.”
Wales has recorded the strongest house price inflation of any British region or country, with annual growth of 14.7 per cent, making the average home cost £222,639, according to Halifax. In England, homes in the South West saw the biggest increases, with a growth rate of 14.3% to an average price of £310,846.
Prices for large homes, including detached homes, rose more than twice as fast as apartment prices in a shift in demand toward larger properties, rising 15.1% and 7.7%, respectively, according to Halifax.
Graham Cox, the SelfEmployedMortgageHub mortgage broker, warned that mortgage rates could rise to 5% by the end of the year, which would be “disastrous” for anyone exiting a fixed-rate deal.
“I think prices are on the verge of dropping, and fast, probably by 5-10 per cent over the next 12 months,” he said.
It’s only a matter of time before soaring prices and a turbulent economy hurt the property market, Alice Hein, broker, Bestinvest said.
“Once a recession enters, the threat of job losses will rear its ugly head – hurting buyer confidence and weakening the market in the process,” she added.