The UK housing market remains resilient, despite the latest Halifax house price index release, which records that the average house price experienced a 0.3% decline in July. This is the fourth consecutive month of decrease, while the yearly decrease in property price stands at 2.4%, which is a minor easing from the 2.6% figure that was reported in June. This adjustment has reduced the average cost of a UK home by approximately £9,000.
Even with these changes in price trends, the housing market is demonstrating resilience, indicated by industry data showcasing increased market activity.
The housing statistics are contributing to the growing perception that the housing market maintains a level of resilience, despite the challenging economic landscape. Interestingly the demand from first-time buyers continues to show relative stability. Some first-time buyers are contemplating the option of buying smaller homes to counterbalance the impact of increased borrowing costs.
In contrast, the buy-to-let sector is experiencing a degree of pressure, with interest rates exerting influence on the strategies of landlords. These considerations are in conjunction with discussions about forthcoming reforms within the rental sector.
The trajectory of the housing market is intrinsically linked with the broader performance of the economy. Several factors are lending support, particularly the substantial yearly wage growth of around 7%. Whilst a potential rise in unemployment could temper this growth, it is unlikely to escalate to levels that would induce a sharp deterioration in market conditions.
Anticipations of further increases in the interest rate of the Bank of England were moderated by an inflation report for June that turned out to be more favourable than expected. Despite recent indications of stabilisation or even a slight reduction in borrowing costs, it’s probable that these costs will remain notably high compared to the norms homeowners grew accustomed to over the last decade.
The ongoing pressure on affordability is set to maintain the situation of restrained market activity. Consequently, the forecast points towards a continued downward trend in house prices as we move into the upcoming year, although potentially not as sharp a decrease as was first anticipated.
If you are considering buying a home, it is important to speak to an independent mortgage advisor to get the best possible deal. We have been helping to get the best deals throughout Bedford, Milton Keynes and Northampton for many years. Contact us today to see how we can help you.
