The property market is facing a challenging combination of rising interest rates, inflation, and mortgage rates, leading to a “perfect storm.” Jonathan Rolande, an industry expert from the National Association of Property Buyers, warns that house prices are likely to decline by an additional five percent before Christmas.
This decline in prices is not the only concern within the property sector; the decreasing number of property sales is also indicating a shift in the market. Homeowners are adopting a wait-and-see approach, observing market conditions and interest rates. Meanwhile, sellers are reluctant to lower their prices enough to attract a limited number of potential buyers.
He discusses his predictions for the remainder of the year: “The latter half of 2023 appears grim for many estate agents, who will struggle to accumulate sufficient financial reserves to navigate the anticipated difficult winter market.
In the rental sector, we can anticipate additional increases in borrowing rates, leading to a decrease in available rental properties as landlords opt to sell without being replaced by new entrants. This poses challenges for tenants, who can expect further rent hikes, albeit at a slower pace compared to previous trends. We are approaching a point where continued substantial rent increases are no longer sustainable.”
Rolande’s remarks coincide with a report highlighting the negative impact of rising mortgage rates on buyer interest, sales, and property prices in June. The Royal Institution of Chartered Surveyors (RICS) reported that new buyer inquiries hit an eight-month low, indicating a renewed decline in the UK sales market.
Property prices also exhibited a slowdown in June, leading several surveyed estate agents from RICS to anticipate potential future price declines in the coming months.
Looking ahead, experts predict a challenging second half of the year for estate agents. Accumulating the necessary financial resources to navigate the problematic winter market presents a significant hurdle. The rental sector is also not exempt from the impact of these market conditions. With expectations of further increases in borrowing rates, landlords may opt to sell their properties instead of bringing in new rental properties.
This reduced supply of rental properties, coupled with rising borrowing rates, poses challenges for tenants who can expect further rent hikes, albeit at a slower pace compared to previous trends.
The observations made by Jonathan Rolande align with a report by the Royal Institution of Chartered Surveyors (RICS), which indicates a negative impact on buyer interest, sales, and property prices in June. New buyer inquiries hit an eight-month low, signaling a renewed decline in the UK sales market.
The slowdown in property prices during June further supports the anticipation of potential future price declines in the months to come. The market continues to face uncertainty and challenges, affecting various aspects of the real estate landscape.
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