In September, the housing market prices saw the highest monthly increase since 2016. The average cost for a home reached £367,760. The inflation rate reached 10.1% in 2022, the highest number since 1982, and it’s only predicted to climb higher.
To alleviate the consequences of inflation, the bank of England has increased the interest rates to 2.25%. This figure marks the start of the recession period. Mortgage borrowing has become cheaper due to this. It’s stretching the housing bubble, causing difficulties for homeowners and renters.
In this guide, we’ll go over this the impact of interest rates on the real estate market in detail. If you want to find property tax accountants in London, visit IBISS & CO. today.
UK’s average house prices are surging sky-high. There have been signs of the market cooling down. There was a 0.1% dip in the prices during June and July after 12 months of consecutive growth. According to experts, there will be a 5% drop in the next two years. However, some recent warnings have suggested that this drop could be around 15%.
Interest rates have risen this year. The base rate in the UK has been climbing since December, going from 0.1% to 2.25%. This rise squeezes everyone’s finances when people are already going through a financial crisis due to the cost of living.
This recent uptick has impacted current and potential homeowners. It’s not just those with tracker or variable-rate mortgages who are affected. First-time home buyers who had fixed-rate mortgage deals can no longer afford it.
Market Crashing or Cooling Off?
Prices will eventually start to level. A crash seems unlikely right now. There has been a limited supply of real estate properties with strong demand. This has resulted in bidding wars, causing many homes to be outrageously priced.
A crash in market prices would be bad for those who have recently bought homes. It will thank their property’s value, running the risk of low or negative equity. However, many buyers can benefit from this if the housing bubble bursts.
Is It a Good Time to Purchase Property?
The housing and real estate market has been extremely unpredictable in the last few years. You can’t time any market now, whether you want to purchase a property or any other asset. It’s risky, and you should avoid it. Interest rates can climb further, especially if inflation rises. This will make mortgages even more expensive.
Your property is a long-term commitment unless you buy and move after a few years. If you want to find a home, make sure you do your calculations, consult a property tax specialist in London, and decide if the prepayments will be affordable for you.
Seek Professional Advice
You need to know where you stand currently because predicting the future is tough. You can seek professional advice from a mortgage advisor, real estate agent, or property tax advisor in London.
Visit IBISS & CO. today to learn how we can help you out. Our professionals can guide you about how the interest rate will affect you as a home buyer. We have the best tax accountants and property tax specialists in London who can help you.
Reach out to us today.