Two more years of misery for London housing market, analysts suggest
The housing market is unlikely to show much signs of improvement over the next two years, piling on fresh misery for the UK’s would-be-buyers.
Halifax owner Lloyds banking group said the house prices would fall by 4.7 per cent this year and then by 2.4 per cent the following year, before recovering.
Consistent rate rises from the Bank of England which have led to higher borrowing rates have been blamed for a slowdown in the housing market.
While securing a cheaper deal on a home can be beneficial on an individual level, slipping house prices can often be an indicator of poor economic health.
This is because how much the price of a home will cost or the rate of a mortgage is often linked to interest rates, which impacts public spending.
However, house prices still remain around £40,000 higher than they were pre-pandemic when the market was bolstered by cash-rich remote workers keen to get on the ladder.
In the capital, the value of properties has suffered the most, with prices down by 4.8 per cent over the last year, to £525,000, recent figures from Halifax reported.
But the region still remains the most expensive place in England to buy a home, leaving many Londoners stuck in the limbo of renting.
A new report from Moody’s, the global risk assessment firm, has suggested that prospective buyers in London will not be elevated from these pressures over the next 12 months.
The financial services company said it expects house prices, including those in London, to decline in the coming months. However, the magnitude of the decline will “not likely be sufficient to materially improve housing affordability in major European cities”.
They said: “City borrowers will remain under pressure while interest rates remain high, particularly in markets such as London and Dublin, which are dominated by floating-rate or short-term fixed-rate loans.”
Tom Bill, head of UK residential research at Knight Frank, said he predicts that the housing market to be slightly better than it was this year but the run up to the general election could impact buyer demand.
“The marker tends to stutter in the run up to the election,” he told City PM
“What happens next year depends on the timing of elections… for the last 18 months, the attention has been firmly on the Bank of England and what they’re about to do next.
“I think that will change next year. I think everyone’s attention will shift towards Westminster.”
He added: “[But] I think once there’s an acceptance that mortgage rates are three times higher than they were three years ago and they’re not coming down again… I think then market activity will start to pick up.”