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.
What’s happening in the UK Property Market?
In October, annual house price growth slowed to 7.2%, down from 9.5% in September. After taking into account seasonal effects, prices were down by 0.9% month-on-month, making it the first decline since July 2021 and the steepest drop since June 2020. The average house price dropped from £272,259 in September to £268,282 in October.
Much of this drop can be attributed to the fallout from the mini budget announced by the former chancellor early in the month. After the announcement, as a way to correct course, market interest rates were raised in an attempt to kerb the impact of inflation. Higher borrowing costs are just the latest in a line of things contributing to a squeeze on household budgets recently.
An increase in mortgage rates also means that a potential first time buyer who earns an average way and is looking to buy a starter home with a 20% deposit will now face a monthly mortgage payment that takes up 45% (nearly half!) of their take-home pay.
Experts expect for the market to continue to slow in the months leading to the end of the year. Inflation shows no sign of slowing down and it is highly likely that the Bank of England will raise the base rate even more. Whether or not these moves will have any impact on the economy or will do anything to relieve pressure on individuals remains to be seen.
What the future of the housing market looks like is highly dependent on the state of the broader economy. There are glimmers of hope though. Longer term borrowing costs have fallen in recent weeks and this trend may continue as long as investor sentiment continues on the current recovery trajectory. However, the weak growth outlook means that labour market conditions will likely soften despite the fact that unemployment numbers are at a 50-year low.
Homeowners with a fixed-rate mortgage are breathing a little easier than some people as they are secure in the fact that their monthly mortgage payments won’t be affected by increasing interest rates for the time being.
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 – October 2022.
If you’re planning to buy or sell property this year contact an advisor for personalised mortgage advice. Use our Mortgage Tool to search for a deal that suits your circumstances.
At Dental & Medical Financial Services, our experts are dedicated to helping our clients select the right mortgage deal for your needs. If you’re ready to take the first step toward home-buying, get in touch with us today.