Although the record for house price costs keep rising, we are actually seeing a slower market creeping in, this month. Nothing to be too alarmed about, yet the inflation and the economic turmoil could be a cause that will affect the housing market on longer terms, which would then be a warning sign. Here is a look at the current realty state, in the UK.
A New Record in Asking Prices
When we take a look at the realty market, the first thing we notice is that the average cost has gone up, once again this month, to reach £371,158. That is close to a full 1% over the previous pricing (0.9%). This takes in account all the properties on sale, all across the UK. One of the reasons that seem to justify this increase, is the lower number of properties that are currently available. Although there is no shortage of work in the near future for local removal companies, and this data might entice us to think that all is well in our great land, that is something that needs to be tempered down by noticing that the annual rate of growth has slowed down to 7.8%, which is also a move of 0.9%, but downward.
These numbers brought to light by Rightmove, show that we may be at a crossroad right now, between a market for sellers and one for buyers. This is due to rising interest rates and profound economic turmoil, which doesn’t seem like it will go away rapidly, in view of the war in Ukraine, and other internal issues, in the UK.
A Realty Market Still Stronger in Comparison to Pre-pandemic Levels
To grasp the reality, it is important to get a larger view of a situation. That is why we also need to look back, three years ago, to understand where we are at today. In this case, buyer demand is actually 20% higher than it was, back in 2019. However, looking at the situation in October 2020, just a year ago, reminds us that the demand is actually 15% lower than it was then.
For now, the slow down has not changed the value of houses on the market. However, analysts warn that if the economic situation remains the same, this might not remain true, in the mid-term. They also say that there is a need for the market to return to some kind of normalcy, after two intense years of frenzy, that followed the coronavirus crisis. And since the situation of the economy in the UK is changing on a daily basis — not for the best — all signs point to a new period of fluctuations, which should see a slow down on the realty market as a whole, with a potential slight lowering of house values.
The rising interest rates currently have two very different effects on buyers. Those that were about to close a deal are rushing to do so, in order to get the best rate possible, while those that were only initiating their search, have decided to put a hold on it, until they get a better view of where the market is headed. This is something we all need to look out for.
