The UK’s Financial Predicament And Its Impact On The Housing Market

King West has been selling country houses for almost 25 years. Our team use their specialist, long-term knowledge of the local market to advise our customers on the best way forward for them. Below, our Director Tom Wilson takes a look at the recent fiscal developments in the UK and what they could mean for King West’s vendors and homebuyers.

The tumbling value of the British pound and the impact of rising mortgage rates is headline news this week. Things have been moving apace since the Government’s ‘mini-budget’ last week and it is difficult to predict how things will develop over the coming months – or what the impact will be on UK homeowners.

On the one hand, recent reports suggest that house prices are predicted to, finally, settle but could yet decline over the next year with some forecasting a fall of up to 10%[1] – no doubt helped by uncertainty surrounding mortgage rates and the intimidating thought of winter fuel bills deterring people from taking any financial risks in the near future. This is despite house prices rising month-on-month yet again in September[2].

Continuously rising interest rates and the plummeting value of the pound are further concerns for us all since the housing market is one of the most sensitive when it comes to interest. Rates in the UK, increased in September 2022 to reach 2.25%[3], the highest rate since 2008, and may rise to as much as 6% before levelling off and coming back down. It is hoped by these measures that inflation will be brought under control and, if we do enter a recession, it will be mild.

There is some hope in the falling price of oil and gas in recent weeks, with the Government’s recent bailout set to limit the cost of energy bills (for this winter at least). This is intended to stimulate the economy, not to mention give some peace of mind to those with period properties that can be more costly to run. It could even spur some current homeowners into investing in energy-saving measures that will future-proof their properties for future generations.

Mortgage lenders are amending their fixed-rate mortgage deals, and with over 3 million households due to re-mortgage over the next year, consumers will be nervous given the uncertainty as to the availability of deals going forward.

At King West, we have seen continued interest from buyers who have failed to find a suitable property so far this year, as well as those moving into the area or who are looking to upsize locally. There are many people locally who wish to sell, but have  yet to find the right house to move to, so are proceeding carefully.

Additionally, the market is still fairly price-sensitive which is causing nervousness about overpaying for property. Vendors are seeking reassurance that the estate agent they employ will price their property sensibly, and indeed has the market knowledge to do so.

Although the local housing market will surely stabilise as we move towards 2023, and these fiscal safety nets take effect; we still believe the market will remain active if a little more cautious – as long as stock levels continue at existing rates.

For more information on King West’s residential property services, go to https://kingwest.co.uk/

[1] https://www.theguardian.com/money/2022/sep/28/uk-house-prices-predicted-fall-mortgage-interest-rate

[2] https://www.theguardian.com/money/2022/sep/26/house-sellers-putting-up-prices-despite-rate-rises-and-cost-of-living-crisis

[3] https://www.bbc.co.uk/news/business-57764601