The United Kingdom’s housing market has been experiencing a steady decline in prices, marking the fourth consecutive month of decrease as of July. According to Halifax, a leading mortgage provider, the dip was marginal at 0.3% compared to June’s figures. However, this trend is expected to persist until 2024.
Over the past year, house prices have fallen by 2.4%, slightly less than the previous month’s 2.6% drop. This downward trend represents the most significant decline since June 2011. The Bank of England has been consistently raising interest rates since December 2021 in an attempt to control high inflation, which has inevitably slowed down the housing market.
Despite the recent decreases, the average home price remains at £45,000 (or $57,250), reflecting a 19% increase from the pre-COVID era. This is due to the surge in house prices during the pandemic. Over the past six months, house prices have remained relatively stable, and first-time buyers continue to participate in the market, with many opting for smaller homes to counterbalance the rising cost of mortgages.
On the other hand, rental property owners may soon feel the squeeze, suggesting that more homes could be put up for sale. This could alleviate the tightness in the property market, potentially leading to further price reductions. Kim Kinnaird, a senior official at Halifax Mortgages, expressed optimism about this trend, stating, “The decline will be slow and will not undo the impressive growth we’ve seen recently.”
Experts, including those from a Reuters survey, predict a 3% fall in house prices in 2023, stabilizing in 2024. However, some believe the dip could be more substantial due to recent mortgage rate increases. Imogen Pattison from Capital Economics noted, “The increasing mortgage rates might lead to a further drop in demand, and as supply becomes more available, we could see a more rapid decline in house prices in the coming months.”
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