The UK Housing Market Isn’t Exactly Looking Sturdy

The UK Housing Market Isn’t Exactly Looking Sturdy
Stéphane Renevier, CFA

3 months ago2 mins

What’s going on here?

Asking prices for homes in the UK posted their biggest wobble for five years.

What does this mean?

British property company Rightmove tracks asking prices around the country, capturing the initial asking price of almost every house up for sale. And this lot of stats is less than reassuring: asking prices slipped by 1.7% between October and November, the biggest fall at that time for five years, with London’s prices stripped back by 2.1%. See, high interest rates have made mortgages prohibitively expensive, so sellers have been forced to slash more than £6,000 ($7,320) off their homes to attract any buyers still in the market. But even with an average asking price of roughly £362,000 ($443,500), the lowest since the end of last year, there were still 10% fewer sales made than the same time in 2019.

Monthly change in asking price

Why should I care?

For markets: Not-so-mates rates.

Rightmove’s tracker indicates that the housing market’s backbone is weakening under the weight of high interest rates and economic uncertainty. Mortgage rates are triple what they were in 2022, and with 1.6 million fixed-rate mortgages due to expire next year, plenty of homeowners will soon be facing higher monthly payments. That’s a rough prospect for Brits who are already contending with wallet-emptying prices for everyday must-haves.

Average asking price

The bigger picture: The market’s pros could be a con.

In fairness, prices haven’t crashed – yet, anyway. Instead, they’ve been working their way down slowly to land just 3% below their May peak. And if anything, the rental market is too strong, with rising mortgages trickling into lease prices with a lag and pricing out plenty of hopefuls. Plus, newly optimistic builders seem to be anticipating a turnaround in the not-too-distant future. Thing is, all of those factors could be down to a limited supply of homes, rather than a projected one-eighty in demand.



All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG