Home prices have dropped by over 3% throughout the year leading up to March.
Prices in the estate market have increased during the last year, indicating that the sector is still active. However, families are finding it difficult to make ends meet due to the rising cost of living and mortgage rates. And home price growth has slowed, and in some cases even reversed, in recent months. According to the most recent statistics from Halifax, the average home price in the United Kingdom dropped to £281,272 in December from £285,425 in November.
With the cost of living increasing and mortgage rates remaining high, industry experts predict even more dramatic shifts this year. These factors make it necessary to understand the London property market if you are looking for a property for sale in Surrey. So, before you hunt estate agents in Surrey, you must know for sure if this is the moment.
The Housing Crisis in the UK
The stamp tax holiday and the global pandemic have both contributed to more market volatility, which has led to sharp increases in home values over the last several years. But the upward spiral in home prices has now leveled out, and we are seeing a decline in values. According to the Land Registry, the standard price of a home in the United Kingdom increased by £16,000 (or 5.5% annually) from February 2022 to February 2023.
In March 2023, prices dropped at the quickest yearly rate in 14 years, according to the most recent statistics from Nationwide, which indicates a string of seven straight monthly declines.
Some respite for family budgets and fewer base rate hikes in the future is anticipated as the Bank of England expects inflation to begin decreasing steeply around the latter part of this year.
Should you invest in a home in 2023?
More houses are often available in the spring, making it a prime time to purchase a property. Postings, or potential purchases, rise again in September and October but fall down again by the end of the year. But it is conditional on your specific situation and the market environment. Is this the perfect time? How do you know? Let’s weigh the benefits and drawbacks.
Buying a Home – The Pros
Potential purchasers may negotiate a price reduction from the listed price. According to Zoopla, homebuying demand is 43% lower than it was at the same time last year due to economic uncertainty, rising mortgage rates, and the continuing cost of living problem. As a result, houses are sitting on the market for longer than usual, and since there are fewer buyers, sellers are offering price reductions of about 4%.
The average rate for a fixed loan has decreased. Mortgages with fixed rates are currently the best deal, contradicting the downward trend witnessed over the last half year.
Buying a Home – The Cons
Potential for a loss of capital. Negative equity is possible for homebuyers who have made offers within the past six months but have yet to close on their purchase with a 5 to 10% deposit.
Lost access to the Help-to-Buy program. Due to the government’s decision to stop accepting new applications for the Help to Buy initiative, many first-time buyers who desperately needed a helping hand getting up the housing ladder would no longer get one.
Pre-purchase considerations
Although the future of estate prices is uncertain, the present economic prognosis indicates that declines are becoming more probable over the next few years. However, if you have already made the decision and believe you can predict market movements, here are some things to keep in mind:
- There may be no relief in sight for rising home prices due to the significant lack of available houses.
- Personal issues take precedence above anything else.
- The location in which you purchase will have a significant impact on the price.
- Springtime is, statistically, the ideal season to make purchases.
Summing Up
So, to finally answer the question, should you invest in a home right now?
The answer might be yes if you possess the financial resources to accept the restrictions we’ve outlined and you can also discover a place you’re glad to call home for a number of years. Right now, there is a historic amount of interest from potential tenants, which is driving prices very high. Because there are fewer potential buyers in the market, investors, especially cash purchasers who can provide a rapid sale, have greater leverage in price negotiations with sellers.