Decline in house prices slowing, data shows – where next for UK property?
House price balance now sits at minus 43% from a revised minus 47% according to The Royal Institution of Chartered Surveyors
David Hannah, Group Chairman at Cornerstone Tax,
discusses what to expect for the rest of the year in light of The Royal Institutions of Chartered Surveyors’ new findings ”
The Royal Institution of Chartered Surveyors’ (RICS) house price balance– which tracks the share of surveyors reporting an increase or drop in house prices across the UK – went up from minus 47% in February to minus 43% in March. Whilst still in negative territory, the result from the survey indicates the new house price balance has ended ten successive months of declines. In light of the positive news reported by RICS, property expert and Group Chairman of Cornerstone Tax, David Hannah, explains what people across the property spectrum can expect from the market this year.
The recent findings from RICS indicate confidence returning to the residential market with increasing signs of supply, demand and sales volumes. These are gradually recovering as buyers and sellers adjust to higher mortgage rates triggered by Liz Trusts’ infamous mini budget, which saw a temporary spike in borrowing costs. The report follows the encouraging news from mortgage provider Halifax, which reported that UK house prices increased by 0.8% in March due to an easing of mortgage rates. In October 2022, average fixed mortgage rates peaked at 6.65% for a five-year fix and 6.52% for a two-year fix. According to Moneyfacts, five-year fixed-rate deals are now at an average of 5.04%, which Hannah points out is a major reason for the property market showing signs of recovery.
Further positive findings from the RICS report show that prices are expected to fall in coming months before levelling out in London in 12 months, which will be a welcomed relief for many in the capital where the average property price is £731,895 according to Zoopla compared to the national average of £290,000 reported by GOV. However, further doom and gloom is expected for the UK’s rental market with a lack of properties to let and a rising number of tenants. Rents are expected to increase by 4% in the next year. Hannah believes this is due to increasing government red tape, which has resulted in an exodus of British landlords and as a result we are seeing a dwindling supply of homes for renters.
David Hannah, Group Chairman of Cornerstone Tax, explains:
“The recent findings from the RICS show positive signs of stability returning to the market. It is crucial to remember that we must look at the bigger picture when assessing the state of the property market, not just the most recent developments – look how quickly the narrative has changed compared to the start of Q1.
“The UK is going through a re-adjustment period regarding property prices and is slowly adapting to the new rates of mortgages. However, we are already beginning to see a fall in fixed rate mortgages, which has resulted in a wave of buyers returning to the property market.
“The UK property market has tended to be more stable than any other global market in the world. I expect to see low to mid to single-digit growth throughout the rest of this year despite the common narrative regarding falls or even a crash. Despite the negative predictions currently, there is an underlying pressure on the market which is leading to upward pressure on prices.
Kindly shared by Cornerstone Tax
Main article photo courtesy of Pixabay
