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Will real estate prices go down? Business News

Interest rates are on the rise and further increases are expected in the coming months as the Bank of England seeks to contain inflation, which is expected to top 10% this year.

This figure – the highest since 1982 – is rightly worrying, but in the housing market, price inflation of 10% may have persisted for long periods. The latest official figures released on Wednesday show house prices in England jumped 9.9% in the year to March, taking the average sale price to £297,524.

Ultra-low interest rates have made mortgages cheaper, inflating a housing bubble that has made home ownership a distant dream for many renters in parts of the UK. So, will higher interest rates help cool the country’s out-of-control housing market?

What is the latest UK house price data?

Official figures show prices have risen in all parts of the UK over the past year. Between February and March 2022, prices fell by 0.9% in London and by 0.8% in the east of England.

Figures released by Halifax on Friday, for a period before the Bank of England’s rate hike, show there were not many signs of a slowdown in April.

Despite fears over the cost of living and steep rises in energy bills, house prices are up 1.1% (about £3,000) from March.

The average house price hit £286,079 after the 10th consecutive monthly rise in prices, marking the longest run of increases in six years.

Halifax said a “race for space”, which began during the pandemic, is expected to continue as people move from city apartments to bigger homes in more rural areas.

April’s price increase was slightly slower than March’s 1.4%, but the annual increase was still 10.8%, well above average wage increases.

Some analysts had expected price increases to subside after a stamp duty holiday ended last year. This does not happen.

Other signs indicate that prices may not fall in the near future. The number of sales jumped 28% in April compared to January.

Estate agent Chestertons said it had seen a 31% increase in the number of people signing up for viewings at its London branches.

Chief executive Guy Gittins said there is now a “strong seller’s market” and the number of sellers willing to cut their asking prices has fallen 38% over the past year.

“The sheer volume of agreed sales in April created a difficult workload for lawyers and banks, which impacted the time it takes to finalize a sale,” he said.

Rising interest rates will affect some buyers’ ability to buy a home, but the effect may be limited.

What is driving rising house prices in the UK?

Prices were inflated by the supply of cheap credit. Although rates are increasing, they are still very low by historical standards. Buyers with a large deposit can still get a two-year fixed contract at an initial rate of around 2%.

Housing supply also remains a problem. There aren’t enough properties people want in the areas they want.

There is now a clear dividing line in the market between houses, which are in high demand, and apartments, which are proving harder to sell in many areas.

The UK’s planning system has been accused of slowing down the process of building new properties and restricting supply.

The government recently abandoned proposals to radically overhaul the system and replace it with a zoning model that would allow developments in designated areas to be approved much faster. Instead, a less ambitious plan was mentioned in the Queen’s Speech.

Big developers are also being criticized for hoarding large amounts of land that may not be used for building for years. In the meantime, developers are profiting from holding land as values ​​continue to rise while the supply of new homes is limited.

These factors will not be affected by rising interest rates.

Cost of living: how to get help

The cost of living crisis has hit every corner of the UK, pushing families to the brink with rising food and fuel prices.

  • The Independent asked experts to explain small ways to stretch your money, including managing debt and getting free items.
  • If you need access to a food bank, search your local council’s website, then use the local authority’s website to locate the nearest centre. The Trussell Trust, which runs many food banks, has a similar tool.
  • Citizens Advice provides free help to people in need. The organization can help you find grants or benefits, or advise you on rent, debt, and budgeting.
  • If you are experiencing feelings of distress and isolation, or if you are struggling to cope, The Samaritans offers support; you can talk to someone for free by telephone, confidentially, on 116 123 (UK and ROI), email jo@samaritans.org or visit the Samaritans website to find contact details for the nearest branch.

What future for UK house prices?

Real estate market experts are divided on the evolution of real estate prices…

More about this article: Read More
Source: www.independent.co.uk
This notice was published: 2022-05-23 10:49:12

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