HomeNEWSUK Home Prices Are Expected To Decline, But Not Drastically, According To...

UK Home Prices Are Expected To Decline, But Not Drastically, According To A Survey

The impact of increasing borrowing costs would be less severe than previously anticipated in 2023 due to the resilience of the labor market and decreasing recessionary risks.

Bank Rate has increased from 0.10% in late 2021 to 4.00% today as a result of vigorous policy tightening by the Bank of England in response to inflation rising at multiple times its 2% objective.

Mortgage rates are likely to rise higher for homebuyers as the BoE is expected to add another 25 basis points before taking a break next month, according to a separate Reuters poll.

According to the Feb. 15–27 survey of 19 housing market experts, the average cost of a home will decline 2.4% this year after years of astronomical price increases. This decline is less pronounced than the 4.7% decline predicted in a November survey. According to medians, home prices will increase by an average of 1.0% next year and 3.5% in 2025.

Before the market resumes growth in 2024, it’s likely that 2023 will be a year of transition as buyers and sellers adjust to a new era of higher interest rates, according to Hamptons estate agency’s Aneisha Beveridge.

Bellway and Redrow, UK homebuilders, reported a minor increase in activity at the beginning of the year but noted that the market remained difficult, with rising loan costs and broader inflationary pressures discouraging purchasers.

Due to extremely low interest rates, tax breaks, and the need for additional living space during the COVID-19 pandemic, house prices increased by more than a quarter. However, the boom has since reversed.

According to a RICS survey earlier this month, January saw the widest price drops in Britain’s housing market since 2009. When asked in a Reuters poll how much values would decline from peak to trough, the median response was 8.0%. The range of predictions was 0.0% to 17.5%.

“2023 will see a decline in home values, that much is certain. Yet, it won’t be a disaster, and certainly not one as predicted by several observers, “said Tony Williams at the building value consultancy.

“Why? Because employment is the most important factor in determining the path of the housing market, and it is still doing very, very well.”
Even while 11 out of 14 survey participants predicted an improvement in affordability, eight of them predicted that home ownership would decline over the next several years due to rising property-purchase costs. Only three people predicted an increase.

According to the study, the average rental price will increase by 5.0% this year, next year, and 3.3% in 2025 for people who aren’t yet able to own a property. Only one of the 11 respondents disagreed with the ten who predicted that rentals would get more expensive during the next two years.

Prices in London, which have historically attracted foreign investors, will decrease more sharply this year, by 5.0%, before rebounding by 2.0% in 2024 and 4.0% in 2025. They were predicted to decline by 7.0% this year and level out in 2024 in the survey taken in November.

According to independent property analyst Russell Quirk, “London will recover more strongly in the medium term as political upheaval, economic uncertainty, and returning overseas purchasers raise demand.”

London continues to be regarded as the crown gem of any international portfolio.

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