Since the start of the year to September, housing prices in the UK have been declining by 5.3% throughout all regions as the rising interest rates squeeze the market. The average home in Great Britain costs about 14,500 £ (~194,000 :-, ~16,80€) less than this time last year, constituting one of the sharpest drops in house value since the 2008 financial crisis. The cause of this is the rise of interest rates, which have been on a steady upward trend for nearly two years now and have increased the mortgage costs for home buyers.
For an average first-time home buyer with a 20% deposit on the house, this would constitute nearly 10% more from the buyers’ monthly income than the long-run average of UK mortgages sitting at 29%. However, September was the first month in this long period of rate rises that the Bank of England chose not to increase the interest rates. One could only hope that the British housing market won't become more barren and desolate than it currently is. During August alone, 45,400 house mortgages were approved, 30% down since 2019, before the pandemic. COVID-19 initiated a volatile period for the housing market as most people were not in a position to move, nor did they have a willingness to. The UK is a country of close to 70 million inhabitants for comparison. However, there is some good news. Nationwide- the most prominent UK building society (a building society is a type of financial institution) presented that house prices stabilised in September compared to the 0.8 % declines seen in August. This is good news as it instils confidence in the housing market and means investors and homeowners might once more start to look at buying houses, once again increasing prices. Neighbouring Ireland is seeing the same issues within their housing market, which could indicate that it is a broader European problem rather than a UK-specific problem.
by Edward DP23