Home News UK house price surge to end as cost of living crisis bites: Reuters poll

UK house price surge to end as cost of living crisis bites: Reuters poll

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New homes are seen at an apartment complex in Aylesbury, England, on February 7, 2017. REUTERS/Eddie Keogh/File Photo

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LONDON (Reuters) – Britain’s soaring house prices will end next year as the cost of living crisis and rising borrowing costs put the brakes on a market that has been booming for years. , according to a Reuters poll.

Households are feeling the pinch as inflation is over 10%, the highest in 40 years, and is expected to rise further as energy prices rise by 80% from October. read more

Adding to the woes for potential homebuyers who need to borrow money, the Bank of England has already raised interest rates to 1.75% from a pandemic-era low of 0.10% and has yet to complete, Reuters said. revealed in a public opinion poll.

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“Rising inflation is leading to a tighter cost of living, which is ushering in a new era of rising interest rates,” said Aneisha Beveridge of the Hamptons real estate firm.

“As a result, house price growth is expected to slow steadily for the remainder of the year and through 2023, when interest rates have peaked and a real impact on household budgets is likely to be felt.”

An Aug. 12-30 poll by 21 real estate market experts found that home prices could rise 7.0% this year, slowing to 1.0% next year and 3.0% in 2024. expected to rise. 2.9% next year.

In London, which attracts foreign investors, prices were expected to rise by 5.0% this year, but outperformed the domestic market and were expected to rise by 2.0% next year. This follows the relative underperformance of recent years.

The Hamptons’ Beveridge said: “Affordability pressures are likely to weigh on mainstream markets next year, but especially with the pound continuing its downward trend, making London property more attractive to international buyers. If so, Prime Central London would have room for wonder.

With the average home price of £365,173 ($427,216) and £224,091 for first-time buyers, the dream of owning a home is out of reach for many, according to property website Rightmove. .

The average salary in the UK is only around £30,000 and salary increases have generally not kept up with inflation, making it even more difficult for many to climb the real estate ladder.

“We’re getting to a point where young people can’t even dream of owning a home,” said property market consultant Henry Pryor.

When asked to rate the value of home prices across the country on a scale of 1 to 10, from very low to very high, the median response was 7, consistent with May’s estimate. It was an unchanged 8 in the capital.

In response to another question, the median indicated that prices would need to fall 8.5% to be fairly valued, with expectations ranging from 5.0% to 35.0%.

However, no one in the poll predicted such a decline across the forecast range, and only a few under the base case.

(For more stories from Reuters’ quarterly housing market poll:)

($1 = £0.8548)

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Reported by Jonathan Cable. Poll by Prerana Bhat and Sarupya Ganguly.Edited by Ross Finley and Jonathan Ortiz

Our criteria: Thomson Reuters Trust Principles.

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