about 1 year ago • 2 mins
A recession can huff and puff all it likes: Nationwide said on Tuesday that the UK housing market could be pretty stable next year.
What does this mean?
The saying “safe as houses” might be about to prove itself: British building society Nationwide believes the UK housing market could survive next year’s recession relatively unscathed. There are a few reasons for that, but let’s start with the biggie: around 85% of mortgage-laden Brits fixed their rates on longer-term deals before the biggest rate hikes, and that should shield them for a while. Layer on that wages are pretty solid right now, and that housing already looks a tad more affordable, and panicked price drops should be avoided. In fact, Nationwide predicts prices might dip just 5% next year.
Why should I care?
Zooming out: Get your wallet out.
The housing market’s like a single domino in a precarious lineup. Homes are usually the biggest asset that we own, after all, so changes in their prices can really affect how we feel about our finances. That has a knock-on effect for consumer spending, which just so happens to be the biggest driver of the economy. So if house prices do manage to hold up, Brits – bolstered with a spot of financial confidence – might be up to task of spending enough to stave off a more painful recession.
The bigger picture: It’s a London thing.
Plenty of economists will tell you the UK has a housing supply problem. That makes sense: the country hasn’t built fast enough to keep up with demand, especially in major cities. Case in point: research by Sky News shows that the population in certain London boroughs has grown at double the speed of homes built over the past decade. That squished supply has been sending prices to the heavens, and it could limit any potential falls – bad news for homebuyers hoping for a bargain, but a comforting fact for concerned homeowners.
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