Monitoring the housing market is very important for many, particularly those doctors and dentists who are looking to purchase their first home or who are investing in buy-to-let properties. Our monthly Property Price Update gives you a summary of what the experts are saying.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
UK Property Market Update
While annual house prices haven’t made a complete recovery, and November’s increase of 0.2% did not beat October’s 0.9% rise, they did in fact increase last month, marking the third consecutive monthly increase in house prices. This increase also resulted in an improvement in the annual rate of house price growth, rising from -3.3% in October to -2.0% in November. Even though these numbers are still negative and might not seem impressive, it is in fact the strongest outturn in nine months. The average house price dropped from £259,423 in October to £258,557 in November.
Interest rate changes impact on affordability
Thanks to the expectations for the future of the Bank Rate recently, there has been a marked change in market conditions. If this change continues then it could provide some much-needed support for housing market activity.
Back in August, investors predicted the Bank of England would raise rates to a peak of 6% and lower them marginally to around 4% over the next five years. But now, their views have shifted and they now believe that the current rate of 5.25% is the peak and that the number they’ll work towards over the years is around 3.5% instead.
Looking ahead
Cost-of-living pressure is easing and average wage growth is overtaking the rate of inflation but consumer confidence remains weak and surveyors are still reporting reduced levels of new buyer enquiries. And while the projection is for the Bank Rate to trend downward, there are still factors that could contribute to an increase in interest rates such as measures of domestic price pressures remaining entirely too high despite inflation easing.
Experts say it is too early to be looking to interest rate cuts, and in fact a third of the Bank of England’s Monetary Policy committee voted for an increase at the latest meeting. The remaining members all voted to hold at 5.25%, solidifying the result.
It’s not likely that mortgage rates will return to pre-pandemic lows any time soon. However, lower borrowing costs combined with solid rates of income growth, plus negative house price growth should all contribute to a small rise in housing market activity in the coming months.
Stay in the know
If you’re planning to buy or sell property, check back monthly for our regular update on the nation’s property prices and contact one of our advisers for personalised advice.
Figures quoted from Nationwide House Price index – November 2023.
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