The growth in UK house prices per annum is huge, making houses increasingly unffordable for the average buyer. However, it looks like this growth is finally starting to slow down
The price of property
According to Nationwide building society, the average price of UK homes has increased by over 60% over the last decade. This is due to limited supply and a growing demand
As of July 2022, UK house prices have declined for the first time in a year due to a rising rate of interest and inflation. Rightmove predicted that house price growth will slow from 11% to 7% in 2022. Therefore, the huge pace in which house prices are increasing is finally beginning to slow
If you are interested in learning more about property price trends in the UK, you can check out the government website for more details
The cost of living crisis
The cost of living crisis is reducing the demand for new homes
- Enormous inflationary pressure on goods and services means that the purchasing power of our money is reducing
- Soaring energy bills and rising petrol costs are making it nearly impossible for ordinary homeowners to build savings
- Tax increases are adding pressure
More people are struggling to make ends meet and so are unlikely to be able to stretch their budget in order to purchase a new home
Mortgage costs
Variable rate mortgages make up a substantial 1/5 of UK home loans. Anyone on this type of mortgage will be hit particularly hard by increased interest rates. This is because they are directly linked to the base rate of interest so any rise will immediately affect these homeowners
The rising interest rate can also be off-putting for first time buyers, as it makes them less able to sustain the cost of moving, due to higher borrowing costs. It really is an expensive time to buy a house, especially since experts don’t expect house prices to fall in the short term
Therefore, anyone aiming to get on the property ladder is faced with the difficult decision of whether to buy now or wait to see if prices fall. At the end of the day, anyone considering buying should think about their finances in a long-term mindset to ensure they can meet rising mortgage repayments. We also recommend checking out this blog before undertaking any property purchase, to ensure everything runs as smoothly as possible