12 September 2023 – The last few months have seen property prices fall steadily, indicating that the property sales market is continuing to cool down. On the other hand, the rental market is hotting up with rents continuing to rise.
New data by Halifax has shown that house prices have fallen by 4.6% in August, compared to the same period in 2022. This means the value of a typical home in the UK has dropped by around £14,000 over the past 12 months.
The average house price now stands at £279,569, which is at the lowest level since early 2022 and various industry experts predict that prices are likely to continue to fall into next year.
As the sales market cools down, the rental market is hotting up. Rents have been rising to record levels and continue to do so. According to the latest figures from the Office for National Statistics, rents in the private rental sector have risen by 5.3% in July 2023.
In August, the average rent price in the UK stood at £1,261 per calendar month and the predictions by industry insiders show that the situation is likely to get worse for renters.
High Mortgage Rates Responsible
The fastest fall in house prices since 2009 has been driven by rising mortgage rates. Stubbornly high inflation prompted the Bank of England (BoE) to raise interest rates for 14 consecutive months.
The base rate currently stands at 5.25%, with average mortgage rates hovering around or above 6%. The sharp rise in borrowing costs has made buying a home a challenging task.
After house prices rose drastically during the pandemic, many first-time buyers got priced out. But with rising mortgage rates, more people found they could no longer afford to buy a property.
As a result, many would-be first-time buyers decided to wait for rates to fall again and