It has started to happen. Following the latest official data from the Land Registry showing a 9.8% year on year house price rise in December 2022, figures are now falling month on month.
In December, the average house price in the UK dropped by 0.4% – which is a fraction of what Scotland prices dropped by, 2.9%.
With the cost of living having such a huge affect on affordability, partnered with increased mortgage interest rates, it is predicted by industry experts that we will continue to see a drop in prices until such time as there is a balance on monthly household bills.
We should bear in mind, that even though the thought of property prices dropping can be initially daunting, prices have increased so much (especially over the last 3 years), that the drop recorded is really very little.
With an average house price in December reported to have reached £294,329 it could certainly be argued that a “levelling out” of prices is due.
In January 2023, 73% of property transactions were completed below the original asking price – the highest percentage since January 2020, another clear indication that with buyers not being able to access the funds to purchase as freely as in previous years, property prices are in for a drumming.
Another interesting fact is the amount of time it is taking to secure a buyer. The UK average in December was 52 days, and although this time of year is traditionally tougher, October was sitting at 40 days.
If we go back to March 2022 the average amount of time was only 33 days.
So, what is going to happen for the rest of the year?
Simply put, we are in a cost-of-living crisis. As long as this is the case, the housing market will be affected. Rightmove are suggesting a soft drop of 2%, where Analysts at Capital Economics are predicting a drop of a heavier 12%.
Regardless of who is right, no one has said that prices will either stabilise or increase.
Where do we go from here?
We need to look at the lenders to answer this one. Literally hundreds of deals have been withdrawn, and with the mini budget in September, rates increased incomprehensibly. Where rates were sitting below 1% back in 2021 they jumped up to above 5%.
The best deals at the time of writing this article were around 4%, with some banks offering 3.99% deals.
Unfortunately, the Bank of England may not have finished raising the base rate (it currently sits at 4%).
Therefore, no one really knows what will happen – but we expect it to continue to be tough.
One statistic to bear in mind is, more than 1500 mortgages were withdrawn in September, resulting in average rates on two-year fixed deals rising to a 14 year high.
Getting it sorted
So, if you are struggling to sell it may be that you have been given poor advice from your current estate agent. Get a revaluation of your property, maybe look to change who you are using.
If you are buying on remember, it is all relevant. If your property has dropped in price, then the one you are looking to purchase has done too.
This article was submitted to be published by the Property Ladder Group as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.