Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “House prices remain on a downward trend, but they are not falling fast enough to make the numbers work for many would-be buyers who have been priced out of the market.
“The housing market typically ratchets up in summer, when buyers emerge in the warmer weather. But this year, buyers haven’t raced out of the traps, with the affordability squeeze from high mortgage rates and high inflation keeping many at bay.
“While inflation fell sharply again in July, the record-breaking wage growth run in the April to June period has fuelled concerns that price rises will take longer to ease, which could force the Bank of England to up interest rates again to tame inflation. While lenders have been cutting mortgage rates over the past couple of weeks, the fear is the factors that are keeping mortgage rates elevated persists.
“House prices are likely to continue to sag under the weight of an uncertain market and hesitant buyers. However, strong wage growth, in tandem with the greater availability of longer-term mortgages and more flexibility from lenders, could continue to support the property market, which could result in a soft landing for house prices rather than a crash in the near future.”
“Rents ticked higher in June, leaving many tenants under the cosh. Those with modest incomes have found themselves wrestling with escalating rental costs, forcing them to sacrifice a sizeable portion of their hard-earned income to keep a roof over their heads. This leaves them with less money for other essential needs or even to indulge in discretionary spending.
“With the cost of borrowing remaining high, despite recent falls in mortgage rates, the dream of home ownership may start slipping away and those who were once keen on purchasing a home could suddenly shift their sights toward the rental market, fuelling demand.
“It is becoming increasingly important for tenants to plan ahead to ensure they don’t find themselves in a position where they can no longer afford their rent.”
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