UK House Prices Set to Fall in 2023 Amid Rising Mortgage Rates
The UK housing market has finally come to a halt after more than two years of growth, as rising mortgage rates have deterred buyers from entering the market. According to the Royal Institution of Chartered Surveyors (RICS), a net balance of 2% of property professionals reported that house prices were falling across the UK as a whole, rather than rising.
House prices in the UK have stalled after more than two years of growth.
This stall marks the end of a sequence of positive readings that had been running for 28 months in a row. While prices fell in the South East of England and East Anglia, they rose in some parts of the UK. Property professionals based in Scotland and Northern Ireland reported an upward trend in house prices, despite the pace of growth being softer than earlier in the year.
The Impact of Rising Mortgage Rates
The rise in mortgage rates has had a significant impact on the housing market. Agents are now expecting prices to drop over the coming year, while RICS added that rents are expected to continue heading higher amid an imbalance between demand from tenants and the supply of homes to let.
Mortgage rates have risen, deterring buyers from entering the market.
Tenant demand continued to rise at a solid pace, with a net balance of 46% of survey participants noting an increase. Rents are expected to be around 4% higher in a year’s time.
The Consequences of Buyer Caution
New buyer inquiries fell for the sixth month in a row in October, while survey feedback on buyer demand was negative across Britain. The average time from listing to completion also hit 18 weeks, up from 16 weeks a year ago.
“The latest feedback to the RICS survey provides further evidence of buyer caution in the face of the sharp rise in mortgage costs,” said Simon Rubinsohn, RICS’ chief economist.
The Importance of Realistic Pricing
As a result, the volume of activity is likely to slip back over the coming months, and realistic pricing is now much more important to complete a sale.
“However, the employment picture remains critical to the medium-term outlook, and for the time being, that remains solid,” added Rubinsohn.
The Outlook for the Housing Market
While the settling down in financial markets could provide some relief, it may be premature to assume this will be reflected in a reduction in lending rates anytime soon in the current environment.
The UK housing market is expected to slow down in the coming months.
In conclusion, the UK housing market is set to slow down in the coming months, with prices expected to fall in 2023. The rise in mortgage rates has had a significant impact on the market, and agents are now expecting prices to drop over the coming year. As the market continues to evolve, it remains to be seen how the housing market will respond to the changing economic landscape.
