UK home prices fail to rebound during the spring season due to elevated mortgage rates in Halifax
The UK property market is currently facing a mix of predictions and recent trends that are shaping its future.
Most analysts, including Savills and Estate agent Knight Frank, have revised their forecasts, with Savills predicting a 2.5% rise instead of a 3% annual drop, and Knight Frank anticipating average growth of 3%. On the other hand, Zoopla is predicting growth of 1.5%, while Halifax is now forecasting modest price increases for the rest of the year.
One of the key factors affecting the market is high inflation, which has historically led to a flattening or marginal decline in average house prices due to reduced purchasing power. However, inflation has slowed in recent months, providing a glimmer of hope for the market.
Borrowers are keeping a close eye on the expected interest rate cut from the Bank of England in the coming months, which could potentially stimulate the market.
The political landscape is also playing a role, with the general election potentially contributing to lower market activity. Some homebuyers and sellers may be hoping for a Labour general election win to boost the property market, as Labour has promised a Freedom to Buy scheme for new buyers and plans to reduce the first-time buyer stamp duty threshold from £425,000 to £300,000.
Labour has also pledged to build 1.5 million homes over the next five years, which could help address the current shortage of available properties that is underpinning higher prices.
Mortgage affordability is another challenge facing homebuyers and those coming to the end of fixed-term deals, as higher mortgage rates and sky-high house prices are causing a dearth of demand in the market.
Despite these challenges, the market may be set for a busier period now that the election is out of the way, according to Nicky Stevenson, managing director at national estate agent group Fine & Country.
In June, the Halifax House Price Index, created by the UK-based financial institution specialised in mortgage lending and real estate data, showed that the average house price in the UK is £288,455, with annual price growth rising for the seventh consecutive month. However, the average house price dropped by 0.2% on a monthly basis in June.
London continues to have the most expensive property prices in the UK, averaging £536,306.
Sarah Coles, head of personal finance at Hargreaves Lansdown, notes that the market is currently suffering from a lack of demand due to the aforementioned factors.
In conclusion, the UK property market is facing a variety of factors that are shaping its future. While there are predictions of growth, challenges such as mortgage affordability and a potential lack of demand remain significant obstacles. Only time will tell how these factors will play out in the coming months.
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