House prices down, but not falling fast enough to offset high mortgage costs
1st August 2023 07:37
by Myron Jobson from interactive investor
interactive investor comments on the latest Nationwide House Price Index.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “House prices are down, but they are not falling fast enough to offset the hefty financial burden of high mortgage rates.
“The housing market typically ratchets up in summer, when buyers emerge in the warmer weather. But this year, buyers aren’t racing out of the traps, with the triple whammy of high mortgage rates, broader cost of living pressures and home values being so high keeping many would-be buyers at bay. Nationwide’s data shows that 86,000 housing transactions were completed in July, 15% below the levels prevailing the same time last year and around 10% below pre-pandemic levels.
“Buyers seem to be pretty patient right now. Until things get a little better, they will continue to hold out. Buyers will be hoping that the recent modest falls in mortgage rates is a sign of more significant dips to come which would push the affordability pendulum back in their favour. But the fall in mortgage rates could temper the downward pressure on house prices as this increased affordability could attract more buyers to the market, leading to high demand for properties.
“Both buyers and sellers will need to thread carefully in the current uncertain period in the housing market. Sellers may have to adjust to the new status quo in the housing market by being flexible on price given the growing challenges posed by high mortgage rates and inflation. Buyers may be forced to adjust their criteria or wait even longer until they can make the numbers work to get on or move up the property ladder.”
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