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Experts have told Express.co.uk the housing market is starting to feel the bite of the cost of living crisis. Prices fell for the first month on record according to Rightmove and Halifax. Rightmove kept the average UK property price down 1.3% to £4,795 at £365,173 in August. The Halifax House Price Index maintained house prices fell 0.1% in July, down £365 month-on-month.
While average wages rose by 4.7% between April and June, the Office for National Statistics (ONS) added that the “real value” of wages fell by 3%.
Average two-year and five-year fixed mortgage rates rose 0.4% and 0.52% respectively in July, according to research firm Moneyfacts.
Inflation also hit a 40-year high of 10.1% a year, the ONS estimated on Wednesday, above a consensus forecast of 9.8% and down from 9.4% in June.
The Bank of England expects inflation to peak at 13.3% in October, while energy bills are expected to climb to £3,523 on October 1 according to Investec.
Due to soaring average cost of living and mortgage rates, as well as falling “real” wages, house price growth slowed from 12.8% to 7.8% between May and June, in one of the biggest monthly declines of the year. growth ever recorded by the ONS.
Jonathan Hopper, CEO of Garrington Property Finders, has now told Express.co.uk that “the rising house price juggernaut is slowing sharply”.
The UK property market has been called a ‘seriously slowing juggernaut’
Prices fell for the first month on record according to Rightmove and Halifax
Mr Hopper told Express.co.uk: “The average price paid for a house increased by 1% between May and June.
Although this is a solid jump and the eighth consecutive monthly increase in values, it is only a fraction of the 5.7% peak seen in June 2021.
“This comparison with the explosive growth seen a year ago partly explains why today’s overall figure looks rather flat.
“But the slowdown is not a statistical anomaly. Economic gravity is finally catching up with the once overheated real estate market.
Jonathan Hopper said ‘economic gravity is catching up with the overheated real estate market’
The ‘frantic market’ is ‘transformed into sellers wanting the ‘best buyers’”
The CEO of Garrington Property Finders continued: “Rather than slipping into its usual summer vacation lull, in recent months the real estate market has been shocked by the accumulation of recessive clouds, and everything has changed. for buyers and sellers.
“With consumer inflation now at a 40-year high and real British profits falling at the fastest pace on record, confidence is beginning to wane – and this is rapidly reshaping familiar post-boom patterns. pandemic.
“Sellers have become much more flexible in their pricing, with many wanting to get a deal done quickly before a possible loosening of the market.
“Meanwhile, buyers are much more measured in their approach to trading, which increasingly means looking for a discount to act as a comfort cushion to offset unknown risks.
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“While there is still a severe shortage of homes for sale in many areas, we are seeing more and more retirement-age sellers coming onto the market, not only to downsize but also to unlock equity and move into a smaller, more energy-efficient home with lower running costs.As a result, some homes with an EPC A, B, or C rating begin to attract a premium.
“Transactions are still extremely slow and transfer agents and mortgage providers are under enormous pressure as demand skyrockets from owners who are repaying, either out of need or fear.
“From a frenetic market driven by sellers looking for the ‘best prices’, the market has now shifted to sellers looking for the ‘best buyers’. Certainty and flexibility have become negotiable commodities in negotiations. Shoppers offering these benefits are increasingly able to get price discounts in return, which was rarely the case just three months ago.
It comes as Persimmon, one of the UK’s leading homebuilders, generated sales of £1.69billion in the first half of 2022, but with warnings the company ‘gushing cash is “not in control of its own destiny” on housing prices.
“If interest rates continue to rise, it’s hard to see how immune the housing market would be”
Persimmon delivered 6,652 homes in the first six months of the year, at an average sale price of £245,597.
They noted that cost inflation is currently between 8 and 10%, but added that “sales price inflation is currently mitigating this.”
Charlie Huggins, head of equities at the Wealth Club, told Express.co.uk that property prices have “seen remarkably robust since the start of the pandemic” due to savings and cheaper mortgages.
Mr Huggins said: “Persimmon has sprung money in this environment and is returning record amounts to shareholders.
“But make no mistake – the main reason for Persimmon’s success is high house prices and the general strength of the housing market.
“It’s something he has no control over, and that could be about to change. Rising house prices in recent years mean homebuyers need to borrow more to move up the ladder. housing.
“Combine that with rising interest rates, which ultimately means more expensive mortgages, and the affordability of property could drop significantly. If interest rates continue to rise, it’s hard to see how the housing market would be immune.
“Right now, Persimmon is a slot machine. But with building costs rising, they need property prices to keep rising or margins will be under pressure.
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