House prices in the UK are likely to fall by at least 10% peak to trough as a consequence of higher mortgage borrowing costs and the general cost of living crisis, according to John Charcol.
Activity in the housing market as a whole has fallen sharply since October, but for anyone planning to move at the moment are likely to find that it will be an easier time to buy – but a more challenging time to sell.
While there will be less competition from other purchasers in the buying market, Ray Boulger, senior mortgage technical manager at John Charcol, believes that achieving a sale will become all about being prepared to accept the best current offer – rather than holding out for a price which might have been achieved previously.
The biggest single factor influencing house prices is mortgage interest rates, and although the cost of fixed rate mortgages has fallen back from the levels seen previously, they are still much higher than rates available up until 2021.
Boulger said: “The cheapest five-year fixed rates available now are just under 4%, compared with under 1% in 2021, and I don’t expect rates to fall much further this year.
“The impact on affordability of such a large interest rate increase so quickly will result in house prices continuing to fall for several more months – and I expect a peak to trough fall of 10-12%.”
“See below for the number of annual housing transactions going back to 2006. John Charcol predicts a modest fall in transaction numbers this year, to around 1.15m.
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