The UK housing market has been facing a downward trend in house prices, and according to a recent report by Halifax, this decline is set to continue into the new year. While the rate of reduction has slowed down, homeowners and potential buyers should brace themselves for further drops in property prices. This blog post will explore the reasons behind this trend and its implications for the housing market.

 Slower Rate of Reduction in House Prices

Halifax, which is part of Lloyds Banking Group, reports that property prices in the UK were 4.7% lower in September compared to the previous year. Although prices experienced a 0.4% drop from the previous month, the decline was not as significant as before. This slowdown is attributed to high interest and mortgage rates, which have impacted the market.

 Realistic Selling Prices and Buyer’s Market

As interest rates are expected to remain higher for a more extended period, homeowners are becoming more realistic about their target selling prices. The market is increasingly favouring buyers, leading to a shift in dynamics. Kim Kinnaird, director of Halifax Mortgages, explains that this buyer’s market will exert downward pressure on house prices in the upcoming months.

 Buyers Opting for Smaller and More Affordable Properties

According to Halifax and Nationwide surveys, buyers with high mortgage rates choose smaller, more affordable properties. This trend reflects the need for buyers to adapt to changing affordability levels. It is important to note that these surveys are based on mortgage lending data and do not include cash buyers or buy-to-let deals.

 Increased Supply and More Negotiating Power

Compared to the previous year, the property market is now offering a stronger supply of homes. This increased inventory gives buyers more options and room for negotiation. As a result, sellers are experiencing more pressure during negotiations, leading to downward price adjustments.

 Long-Term Impact of Base Rate Rises

Although house prices have declined, Nicky Stevenson, managing director at estate agent group Fine and Country, highlights that they remain 1% higher than in December 2021. This can be attributed to the Bank of England’s ongoing base rate rises, which began in December 2021. The long-term effects of these rate hikes are expected to keep the housing market subdued, affecting affordability levels for buyers.

 Buyers’ Response and Future Expectations

The impact of rising mortgage payments has left some buyers with no choice but to reduce the size and value of their intended purchase to afford monthly repayments. Additionally, others have decided to abandon their moving plans altogether. However, first-time buyers may find the falling prices beneficial and opt for longer-term mortgages to spread out the cost. It is essential to weigh the long-term financial implications of such decisions.

As the UK housing market continues to experience falling house prices, homeowners and potential buyers should carefully consider their options. While decreased prices may present opportunities for some, buyers must also be cautious about affordability and the long-term implications of their decisions. With the current buyer’s market dynamics, staying informed and making well-informed choices is essential. Whether you’re looking to sell, buy, or make strategic moves in the property market, now is the time to evaluate your options and take action.

If you’re interested in learning more about the UK housing market or exploring your options as a homeowner or potential buyer, contact MortgageTek today. Our team of experts is here to provide unparalleled guidance and support throughout the process. Please contact us now and take the next step towards reaching your real estate goals.