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
Annual house price growth remained largely stable during the month of June, down 3.5% after falling 3.4% in May as well. Prices also stayed mostly stable, ticking up just .1% after seasonal effects are taken into account, with June typically being the strongest month in terms of seasonal price rises. The average house price was £262,239 in June, up slightly from May’s £260,736.
The Bank of England base rate has increased exponentially over the last few years. And the high rates we have been experiencing lately in an attempt to battle inflation (which hasn’t been moderating as quickly as experts had hoped) have an impact on mortgage pricing. This will have the unfortunate consequence of additional rate hikes and the likelihood that rates will be high like this for quite some time.
Borrowing costs have rocketed back to levels seen after the mini-Budget announcement last year. However, this time, there is less negative sentiment attached. Consumer confidence appears to be improving, although they remain below long-run averages, and the number of mortgage applications has not yet declined.
Looking ahead
As a result of high borrowing costs, there will likely be a significant drag on housing market activity in the near future. Plus, house prices remain high relative to earnings, so saving for a deposit will continue to be a barrier to those wishing to enter the property market.
However, despite higher interest rates being available to savers, the sharp rise in rents and high inflation which shows no sign of slowing down means it’s clearly quite difficult for hopeful homeowners to save for a deposit.
If the broader economy performs well, then many experts predict that a relatively safe landing is still possible. Income growth is expected to remain solid, with the unemployment rate staying below 5%, and labour market conditions forecasted to remain relatively strong. The bank rate should hit a peak in the quarters ahead, so longer term interest rates should also start to come down again.
With the prospect of moderating mortgage rates, income growth, and modest price declines, affordability should improve over time.
Stay in the know
If you’re planning to buy or sell property this year, 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 – June 2023.
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