Interactive Investor

Slowdown in UK house prices continues

24th May 2023 10:57

by Myron Jobson from interactive investor

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Myron Jobson comments on the latest ONS House Price Index, as fast-rising rents become a growing blocker for would-be buyers.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “While there has been a slowdown in house price inflation, the cost of homes remains unacceptably high for many would-be buyers, who are consigned to the sidelines until they can make the numbers work.

“Tight supply and the new spring demand from buyers are keeping prices elevated. Rightmove’s latest house price index revealed that demand for homes is up 11% on the level we saw in 2019, while the number of sales agreed is up 4%.

“Property prices are expected to move lower this year, but if the inventory of homes doesn’t pick up and demand remains strong, prices may not have far to fall.

“But even without a price increase, buying a house today is more expensive than it was a year ago because of higher mortgage rates following numerous hikes to the base rate. A buyer’s only reprieve, it would seem, is a drop in mortgage rates which, in turn, is dependent on how stubborn the current wave of inflation proves to be and the movement of the base rate to reign it in. Until affordability improves for a large section of the home-buying market, the downwards pressure on prices could continue.”


Myron Jobson says: “Renters across the country are paying historically high rents. Rising rents threatens to maintain upwards pressure on inflation even as consumer price growth stalls for other categories like food and energy.

“Fast rising rent is a growing blocker for many would-be homeowners, curtailing deposit-building efforts. As long as mortgage rates remain elevated, more Britons will be inclined to rent rather than taking the plunge into home ownership. 

“Soaring rents and expensive food prices are driving inflation, and this inflationary pressure will only grow as more renters sign contracts with a higher cost burden. 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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