UK housing demand nearly halved in the wake of Liz Truss’ September ‘mini’ budget. This is because Home Her hunters are responding to rising mortgage rates by abandoning their buying plans and instead looking to the rental market.
Demand has fallen 44% since the date of the ‘mini’ budget, with the steepest declines in the South East of England and the West Midlands, according to property portal Zoopla. We define it as contacting an agency directly about a specific home for sale, rather than contacting them directly.
“It’s as if the housing market went into Christmas mode eight weeks early,” said Zoopla executive director Richard Donnell.
A tax cut proposed by the former prime minister and his premier, Kwasi Kwarten, has caused turmoil in the mortgage market and pushed up interest rates. percentage point up In just over a week, more loans are made, forcing lenders to withdraw their goods. This has forced many buyers out of the market.
Plummeting demand has raised expectations that prices will fall next year, with the Office of Budget Responsibility predicting a 9% decline.
Zoopla’s house price index posted a 7.8% gain in the year to the end of October, but “a lot of the momentum came from house price inflation, and the index is consistently lagging,” Donnell said.
Sellers across the UK are already offering discounts on asking prices. In the southeast of England, about a third of homes for sale have seen their initial price drop, according to Zoopla.
This is a clear sign that the market is cooling after the overall market has been hot. pandemic.
Government support for the housing market, demand for more space, and a frayed connection to inner-city offices have all contributed to the frenzy of activity during the pandemic. Real estate sales and prices unexpectedly skyrocketed.
“The housing market is transitioning from an unsustainably strong market. [during the pandemic] It balances the issue of affordability for homebuyers, who are most dependent on mortgage financing, and the weaker economic outlook for 2023,” said Zoopla.
Borrowing costs have risen over the years, bank of englandThe decision to raise interest rates again and again to combat soaring inflation.
The rate of increase was accelerated by the “mini” budget. Costs have fallen in the past few weeks as Truss and Kwarteng’s proposals have been dropped, but stay close to 6%.
Interest rates of less than 2% were widely available a year ago, but borrowing costs are not expected to return to that level in the foreseeable future.
Higher interest rates derailed buyers across the country, collapsing deals and forcing those who had been saving security deposits to look to the rental market instead.
According to real estate website Rightmove, rental inquiries are up quarter-over-year, or about 100,000, with realtors handling an average of 36 inquiries per property.
Christian Balshen of Rightmove’s rental team said:
“The number of aspiring first-time buyers who now have to look to the rental market makes the situation even worse. not.”