UK Property Market Facing a Major Slowdown
The UK’s property market is experiencing a significant slowdown, with house and flat sales projected to hit their lowest levels in a decade. According to Zoopla, a leading property website, transactions are down by 20% compared to last year. This decline is largely due to high mortgage rates and the ongoing cost of living crisis.
The Numbers Behind the Decline
Zoopla’s latest house price index reveals that the number of homes sold subject to contract is significantly lower this year. The forecast indicates that sales in 2023 will be the lowest since 2012, with an expected total of around one million completions. This means that, on average, each household in the UK is moving once every 23 years, far below the typical average of eight years.
Economic Impact on the Housing Market
The current economic climate, characterized by rising mortgage rates and increased living costs, has had a deep impact on the housing market. Nationwide Building Society reported the sharpest fall in house prices in 14 years this past July. Despite some lenders reducing mortgage rates, the cost of borrowing remains a significant barrier for many buyers.
Mortgaged vs. Cash Sales
Zoopla predicts a 21% decline in property sales by the end of 2023, driven mainly by a 28% drop in sales involving mortgages. In contrast, cash sales are expected to fall by just 1%. The Bank of England’s 14 consecutive interest rate hikes to curb inflation have contributed to this trend, and high rates are likely to persist for some time.
Future Outlook for the Housing Market
Richard Donnell, Zoopla’s executive director, expects the number of sales to recover in the next two to three years. Factors such as more flexible working conditions, demographic trends, a strong labor market, and high immigration rates are anticipated to drive this recovery. However, Donnell warns that any substantial improvement in affordability won’t be seen until mortgage rates drop below 5%, which he predicts will not happen until the first half of 2024.
Regional Variations in House Prices
Zoopla’s report shows a modest 0.1% increase in UK house prices over the last year, marking the slowest rate of growth since 2012. Regional variations are evident, with Scotland experiencing a 1.7% rise, while London saw a 1% decline.
Market Predictions and Buyer Behavior
Sarah Coles from Hargreaves Lansdown suggests that as wages increase relative to property prices, affordability should eventually improve once mortgage rates decrease sufficiently. However, predicting the exact timeline for these changes remains challenging. Matt Thompson from Chestertons notes that while some buyers are cautious and delaying purchases, others who have secured favorable mortgage rates are keen to buy before their rates expire.
Conclusion
The UK property market is currently facing challenging times, with sales projected to hit their lowest levels in a decade due to high mortgage rates and economic pressures. However, there is hope for recovery in the coming years as economic conditions stabilise. If you’re thinking, “I need a quick sale” or want to “sell my house fast,” Angel Properties can help. Visit angelproperties.uk for a quick home sale and expert assistance. Contact us now or enter your address on our website to get a free valuation and take the next step towards selling your property.
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Original Link: https://news.sky.com/story/zoopla-says-number-of-uk-property-sales-on-track-to-fall-to-lowest-level-in-a-decade-12950575
