Recently, there’s been a lot of talk on social media from so-called property experts predicting a massive 20%-25% drop in house prices. But let’s be honest, that’s pure nonsense.
If house prices really did fall by 25%, the entire UK economy would be in serious trouble. It would be chaos, and we’d all have bigger worries than just property prices.
The real issue at hand is the lack of housing supply. No matter what targets various governments set, including the 1.5 million new homes promised by the current administration, we’re barely scratching the surface. To put it bluntly, we’re only building around 62 homes a year on average — a drop in the ocean compared to what’s needed.
Even the ancient Egyptians were building pyramids faster than we’re putting up new homes. And those pyramids are still standing strong after 3,000 years! In contrast, some new builds today might struggle to withstand a strong gust of wind.
The shortage of homes is one key reason why house prices have remained surprisingly steady, even with interest rates climbing. Another reason is our deep-rooted love for property. In the UK, we’re passionate about bricks and mortar — it’s a part of who we are. The demand for homes is always there because it’s ingrained in our culture.
While our ancestors looked to the stars for life’s big questions, we’re more likely to browse Zoopla, dreaming of that six-bedroom house that’s out of our price range. It’s just how we’re wired.
There’s also another factor keeping the property market buoyant: mortgage rates.
Last week, Virgin Money announced significant cuts across its residential mortgage range, including deals for those with smaller deposits. TSB, too, reduced its rates by up to 0.5%. Since June, we’ve seen mortgage rates gradually decrease across the board, with more lenders now offering deals starting with a three. This improvement in affordability is helping to get the market moving.
And moving it certainly is. Official figures from the Bank of England, released on Friday, showed that the number of mortgage approvals for house purchases rose to 62,000 in July, the highest level since September 2022, and up from 60,600 in June.
This positive momentum seems to have continued into August, with many in the property industry reporting higher-than-expected demand for the time of year.
Nationwide’s latest data supports this, showing that the average UK house price grew by 2.4% in August, up from 2.1% in July. This marks the fastest pace of annual growth since December 2022.
And all this is happening before a potential interest rate cut from the Bank of England, which could come before Christmas. If that happens, 2025 might just see the property market really take off.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Author:
Founder and mortgage and protection adviser in Albion Financial Advice
Dariusz Karpowicz is a seasoned adviser in the financial services industry. After gaining valuable experience working with an established broker, he founded his own practice, Albion Financial Advice. This firm is dedicated to assisting clients in acquiring properties and advising on various mortgage options. Born and raised in Gdańsk, Poland, Dariusz moved to the United Kingdom in 2006.
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