House prices hit by rising interest rates
Rising interest rates are putting a brake on the UK housing market as new data shows asking prices are falling
- The average asking price from new sellers fell by £82 this month to £372,812
- Rightmove said it was the first time in six years that prices had fallen in June
- It appeared that the market had entered its summer slowdown earlier than usual
Rising interest rates have slashed the drag on the UK housing market as new data showed that asking prices are falling.
Property website Rightmove reported that the average asking price from new sellers fell by £82 this month to £372,812.
The company said it was the first time in six years that prices had fallen in June, showing the market was entering the “summer slowdown” period earlier than usual.
“There have been some significant increases in fixed mortgage interest rates in recent weeks, which have put pressure on budgets,” Rightmove said.
The company added that higher monthly mortgage payments may have convinced many to put home-buying plans on hold.
On the slide: property website Rightmove reported that the average asking price from new sellers fell by £82 this month to £372,812
With interest rates projected at 6 percent by the end of 2023, Rightmove predicts house prices will continue to fall by 2 percent overall by December.
With interest rates projected to continue to rise, Tim Bannister, Rightmove’s director of real estate science, predicted that the market would “probably feel very hectic” for those taking on mortgages as they try to “lock in quickly the best interest rate they can find.” ‘.
While he said higher mortgage rates had had a “limited” effect on demand so far, “more twists” were expected for the rest of the year as the market faced “stubbornly high inflation rates” and surprisingly large wage increases. .
“Ironically, strong wage inflation rather than mini budget is now the main drag on the housing market,” said Tom Bill, head of UK residential research at real estate firm Knight Frank.
He added: “Those who buy, sell or re-mortgage will hope that the Bank of England does not face a second ugly underlying inflation reading on Wednesday.”
The grim outlook for the property market came as the Bank of England is expected to approve another hike in key interest rates this week to 4.75 per cent – the 13th hike in a row. Chancellor Jeremy Hunt believes the bank has ‘no alternative’ but to raise interest rates.
But the crisis in the mortgage markets, with many homeowners facing huge increases when their fixed interest rates expire, will add pressure to other areas, such as food costs, which have put pressure on budgets.