What will happen to house prices as interest rates rise? – The Independent

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The housing market has been subject to a year like no other – starting 2022 on the back of months of record-breaking increases in house prices, astronomic demand, and properties selling more rapidly than ever before.

But the soaring cost of living, burgeoning inflation and the subsequent raising of interest rates in order to temper rampant rising prices and diminished spending power saw the return of a housing market akin to the kind we had seen in the years pre-pandemic.

The Bank of England was forced to raise interest rates for the ninth time since last December on Thursday – this time to 3.5 per cent.

But how could the events of this year affect the property market in 2023? We answer the key questions:

What will happen to house prices next year?

According to Rightmove, housing prices in the UK increase by 5.6 per cent his year to an average of £359,137 – almost £17,000 higher than in 2021, when prices rose by 6.3 per cent.

The property website now forecasts that in 2023 average asking prices will drop by 2 per cent, which means prices will still remain higher than they were after the home-moving rush of 2021.

It says one of the key drivers of house price growth over the past two years has been “the imbalance of supply and demand, with far more people looking to move than there were homes available for sale.”

In more settled circumstances, prospective buyers would have more time and space to ensure they can scout out the right home to suit their needs.

As a result, Rightmove anticipates the time it takes to sell a home increasing around 60

The original article can be found here