In our latest look at home in the UK, we looked at whether there are worrying trends regarding property prices in 2022.
Interest Rates and Property Prices
The Bank of England’s base rate has recently been at an all-time low, making borrowing money extremely affordable. In an effort to keep inflation under control, the base rate has been raised four times since December. It now stands at 1%. If the rate rises again, monthly mortgage payments may climb as well. This, combined with the rising cost of living, may reduce the number of purchasers who come to the market. We haven’t seen any indications of this yet.
Demand Still High
Indeed, in certain regions of the country, estate agents are still receiving several offers from different buyers for each house on the market. The paucity of inventory is dictating the market’s speed. New housing stock is desperately needed. We can expect house prices to continue to climb, albeit not as dramatically as in past months. This is as long as buyer demand remains high and supply remains short.
Property Prices In 2022 – Buyer Options
If you’re selling a home, chances are you’re also seeking to buy. But one thing is certain. You’ll almost certainly be competing with other purchasers for each house. As a result, you’ll want to be certain you’re in the greatest possible position to move rapidly. So, if you have a home to sell, make sure you get it appraised. Ensure you put it on the market before you begin shopping for a new home. Having your own property sold subject to contract allows you to act more rapidly than others. For example, buyers who must go through the entire sales procedure. Getting a sense of what you might be able to sell for is a good place to start.
Property Prices In 2022 – Rent Or Buy?
According to Rightmove, the average monthly mortgage payment for a typical first-time buyer house has climbed by 13% (+£100) since December last year. This is despite being only 11% (+£87) higher than ten years ago. So, while property prices have risen rapidly, borrowing rates have remained historically low. This has balanced out expenditures. Equivalent monthly rental payments, on the other hand, are 40% higher than they were ten years ago, as tenants suffer the full impact of growing costs, and are currently rising at the fastest rate ever recorded by Rightmove. The difference in payments between paying off a mortgage and paying your monthly rent has shrunk, so renting is no longer significantly cheaper in terms of monthly expenses.
The Future?
According to forecasts, the Bank of England base rate will reach 3% in the second half of 2023, affecting mortgage rates. It’s important to realise that these rates are still historically low. With so much uncertainty, it’s difficult to predict whether or not the housing market will right itself. The effects of higher interest rates and growing costs of living could trickle down to real estate later this year and into 2023. To create forecasts, we must first understand what is happening on the other side of the inflation increase. We do know that the number of new buyers trying to purchase the limited housing stock available is continuing to rise.
