February 27, 2024

Ferrum College : Iron Blade Online

Complete Canadian News World

Do you want to buy a property in the United Kingdom?  Experts say this may be the right time

Do you want to buy a property in the United Kingdom? Experts say this may be the right time

  • The UK property market has proven difficult for both renters and potential homeowners recently – but experts say this could be about to change.
  • Knight Frank’s Tom Bell suggests the next six months could be a good time to get on the property ladder.
  • However, the rental market is expected to remain tight, with rents continuing to rise.

Luxury real estate in the Kensington and Chelsea area of ​​London, United Kingdom, on Monday, August 21, 2023.

Jason Alden | Bloomberg | Getty Images

The UK property market has been a rollercoaster for renters and potential homeowners alike for over a year now.

Rents rose throughout 2022 and 2023 as the imbalance between supply and demand led to fierce competition for rental properties.

Meanwhile, mortgage interest rates reached a 15-year high in Britain earlier this year, driven by higher interest rates and shock moves by the UK government in late 2022. The average fixed rate mortgage rose for two years to 6.86% in 2020. July and was around 6% at the time of writing, according to figures from data provider Moneyfacts.

At first glance, renting or buying a property in the UK does not look particularly attractive at the moment. But according to Tom Bell, head of UK residential research at property firm Knight Frank, the coming months could be a good time to enter the market.

“If you look at what the Bank of England is doing, arguably the best time is now,” he told CNBC’s Silvia Amaro.

This is because the Bank of England is likely to raise interest rates – which determine mortgage rates for millions of UK homeowners. Although speculation has now turned to when interest rates will be cut, Bell says mortgage rates are unlikely to fall sharply: “We’re talking about small movements down.”

See also  Silicon Valley Bank: Regulators take charge as failure raises concerns

The Bank of England, like many central banks around the world, has raised interest rates in an attempt to cool the economy. Recent data, including inflation figures, suggest that higher interest rates are having the desired effect of lowering prices – raising expectations that the central bank may start cutting interest rates in 2024.

Mortgage lenders are also keen to gain and maintain market share in what Bell says has been a “weak” year for the industry, adding downward pressure on mortgages.

Higher mortgage rates typically drag down house prices, a trend that has reversed in the U.K., though prices remain above pre-pandemic levels, according to Richard Donnell, executive director of research at real estate data company Zoopla.

“Prices have fallen modestly by less than 5% with house prices remaining £40,000 higher than before the pandemic began in early 2020,” he told CNBC.

However, Donnell noted that transactions are down 23% this year, and while this is not good news for the property market, it could be good news for some buyers.

“The average sale agreed is £18,000 below the asking price, the highest discount for over 5 years. This means it is a good time to get into the market to negotiate the price more seriously with the number of homes for sale increasing by 40% year on year.” Past.,” he said.

Prices may also continue to fall, notes Donnell. “House prices are set to fall by a further 2% during 2024 as prices adjust to weaker purchasing power even if mortgage rates fall further,” he said.

However, there are potential headwinds for the sales market: the general election expected to be held next autumn in the UK Bill suggests that property markets often slow in the run-up to an election, especially when a change in leadership is expected – as is the case Currently in Britain.

Meanwhile, the rental market is expected to remain tight, with rents continuing to rise. Strength in the labor market, high levels of immigration and rising mortgage rates “trapping potential buyers” into rentals all play a role in this, according to Donnell.

“The imbalance between supply and demand will continue until 2024, but demand will weaken as pressures on affordability increase,” he said. However, he said rents are still expected to rise 4-5% next year.

Bell noted that supply is starting to rise in some areas of the country, but demand still often outstrips it. “It’s normal, but it’s not completely normal yet.”