The UK Housing Market CRASH has only just STARTED and things are shaping up to get a lot WORSE for the UK property market during 2023.
Mortgage interest rates have been slowly falling since the spike following the infamous mini budget from Liz Truss and Kwasi Kwarteng in September 2022.
Some believe these slightly more affordable mortgages will be enough to provide support for the housing market and prevent a large house price crash, but I think they are wrong.
Falling inflation and mortgage interests won't be enough to save house prices. In my mind, the question is no longer will house prices drop in 2023, it's how much will house prices drop in 2023!
Although mortgage rates are down from their peak, they are still more than double what the average homeowner is paying on their current fixed rate mortgage deal.
Every quarter over 300,000 households will be remortgaging from a rate of 2% or below to a new fixed rate deal in excess of 4%. This will increase mortgage repayments by a substantial amount and make mortgage affordability extremely difficult for some homeowners.
First time buyers will also be impacted, even if they can afford slightly higher monthly repayments, the banks are generally lending smaller amounts so it is more difficult to get larger mortgages.
UK house prices were already falling before the mini-budget was announced. The Bank of England has been increasing the base rate since the start of 2022 and this was already starting to impact house prices.
In addition to interest rates, inflation has been in excess of 10%, the energy crisis has doubled fuel bills and market sentiment has been completely destroyed.
Until wage growth starts to overtake inflation for a sustained period, we are unlikely to see any turnaround in the housing market.
What do you think? Is the house market going to crash? Let us know your UK house price predictions in the comments below.
