UK house sales slow to lockdown levels
Cornerstone Tax comments on the revelation by RICS that UK house sales have slowed to the levels experienced during lockdown.
New data from the Royal Institute of Chartered Surveyors (RICS) has revealed that Britain’s housing market slowed further in August, with sales falling to levels not seen since the early stage of the pandemic.
Adding to this, the study also revealed that almost every region in the UK is now experiencing “relatively steep” falls in house prices, the steepest since 2009. This comes as mortgage rates have skyrocketed in the past 6 months, reaching their highest rate since 2008.
In light of this news, David Hannah, Group Chairman of Cornerstone Tax – the UK’s leading property tax experts – discusses the current state of the property market.
Hannah points out that the consistent increase in interest rates by the Bank of England (BoE) has severely impacted Brits’ spending ability, coupled with high levels of interest for a 5-year mortgage. The current average five-year rate is now 6.19%, compared to 2.64% in December 2021.
Hannah notes that this has also had a knock-on effect on Britain’s rental market, as higher borrowing costs have increased demand from tenants unable to secure a mortgage and forced more landlords to leave the sector. This will likely drive-up rental prices, with experts predicting a 25% increase by 2026.
While the market has continued to soften, Hannah states that it is not all doom and gloom and insists that the market continues to show signs of resilience and activity, notably from cash buyers who are taking advantage of the falling house prices.
This comes at a time when the Bank of England has stated that the UK has likely reached the peak of interest rates, a development that Hannah predicts will lead the housing market to react strongly to positive news on borrowing costs.
David Hannah, Group Chairman at Cornerstone Tax, discusses:
“The relentless surge in interest rates orchestrated by the Bank of England, has pushed the average five-year mortgage rate to a staggering 6.19% compared to a mere 2.64% back in December 2021.
“Ultimately this is causes prices to continue to fall. It’s no wonder that the affordability of mortgages has been severely compromised, affecting buyers spending capacity, the affordability metrics remain unbalanced throughout the country.
“Yet, in the midst of this challenging landscape, there’s a glimmer of hope.
“Cash buyers are seizing the opportunities presented by falling prices, demonstrating the market’s resilience.
“What’s more, the Bank of England’s announcement that we may have reached the zenith of interest rates provides a ray of optimism.
“Positive news on borrowing costs could well breathe new life into the housing market.
“So, while the road ahead may seem uncertain, it’s important to remember that even in the face of adversity, the property market can adapt and rebound, offering opportunities for those who remain vigilant and strategic.”
Kindly shared by Cornerstone Tax
