National Association of Property Buyers Warns: House Prices will Continue to Plunge Until March

Real estate market booming in London with house prices soaring

HOUSE prices are expected to fall for at least the next SIX MONTHS, a leading property association has warned.

The National Association Of Property Buyers say homeowners need to brace themselves for reductions until at least the Spring.

Spokesman Jonathan Rolande said: “I expect to see around 0.5% coming off prices each month between now and the end of March.

Explaining why he thinks this is the case he continued: “Although we saw a lift in optimism during September thanks to a Bank of England ‘hold’ on rates and mild weather, things have now toughened up again in October.

Sadly, the trend looks set to continue throughout the winter period.

“With a Bank of England insider recently saying that perhaps only 20 to 25% of the effect of previous rate rises has been felt so far, whilst things could certainly be worse, the market looks to deteriorate further during the coming months.

“The letting market is bucking that trend with demand and rents at all-time highs but this is doing little to encourage investment by small-time landlords – most are choosing not to add to their portfolio and many are quitting altogether, causing further shortages.

“The reduction in the number of transactions is a big concern. Market stagnation is more feared by those in the property world than falling prices. Good economic news is needed to avert this scenario.”

Mr Rolande’s warning comes as reports revealed how asking prices for UK homes are rising at the slowest rate for this time of year since the 2008 financial crash.

According to Rightmove data, the new asking price rose by 0.5% in the month to 7 October to £368,231.

House prices dropped by 0.8% in the 12 months to early October as the lower activity fed through, it said, while the number of agreed sales fell by 17% compared with a year earlier.

Separate figures from Halifax bank earlier this month showed the fastest fall in annual house prices in 14 years in September.

The Bank of England raised interest rates at 14 consecutive rate setting meetings until last month as it tried to tame inflation. In September, its monetary policy committee finally voted to hold the key rate at 5.25% – still the highest rate since the 2008 crisis.

Tim Bannister, who studies property data for Rightmove, said asking prices usually rise after the summer holidays, but that the increase this year was “much more subdued” as sellers adjusted to the weaker market.

He said estate agents were describing the market as “the most price-sensitive ever”. The number of people enquiring about each property advertised on its website was still up by 8% on 2019, before the Covid- 19 pandemic.

Renters are being squeezed as landlords try to pass on higher mortgage costs, amid a continued shortage of housing across much of the country. Separate data from the estate agent Hamptons showed that the average rent in Great Britain rose to £1,325 a month in September, up from £1,186 a year earlier.

The steepest rent increases were in outer London, where prices rose by 16.2% on average, compared with 5.2% in Wales, which had the slowest growth.

Mortgage interest costs for landlords rose by 40% in the year to August, to £15bn a year, according to Hamptons’ analysis of data from the lobby group UK Finance and the Bank of England. It said interest costs could hit £20bn a year within the next two years, as landlords come to the end of fixed-rate deals.