Nationwide says UK property prices have slowed for the third consecutive month and most recently from 11.2% in May to 10.7% in June. The slowdown in growth can be traced to the beginning of the Russian invasion of Ukraine and an escalation of Britain’s cost of living crisis.
Unsurprisingly, property owners ask whether a crash is on the horizon, especially now that the economy is heading into a downturn, and possibly a full-blown recession. Adding to the gloomy atmosphere, Bank of England officials, seemingly immune to the prospect of a slump, have begun to raise interest rates.
While it would be naive to dismiss the possibility of a large and sustained fall in home prices, the weight of evidence is to the contrary.
For one thing, the property market is not homogeneous. London and the south-east have suffered from the Brexit-induced flight of continental workers since the 2016 referendum vote, depressing prices growth in most central districts. Meanwhile Wales and south-west England have witnessed rocketing values following the trend for retired people and white-collar workers embracing coastal towns and rural areas that boast fast broadband. This shift is likely persist, driving hotspots to fresh highs.
Just as important, thousands of sellers are able to ride out a lack of buyers. They want to move home, but they don’t need to make the leap. In other words, their impulse is discretionary and when they find the number of buyers has dried up, they don’t sell.
In June last year there were213,000 transactions. By May this year the total had dropped to almost 100,000, according to HMRC figures, yet prices continued to climb.
The market is undoubtedly going to moderate as disposable incomes are squeezed and homebuyers become evenRead more on theguardian.com