What is Happening to the UK Housing Market?

The UK housing market is experiencing a period of volatility following a huge surge in demand in 2021. Moreover, with interest rates rising, consumers and homeowners are finding it increasingly hard to stay on top of their finances and in some cases, are having to sell or refinance their properties.

There is also the age-old problem in the UK of under supply of housing with excess demand, which is pushing up prices; making it more difficult than ever for people to buy a property.

What has been happening to the UK property market recently?

In 2021, the property market was soaring, largely due to the stamp duty holiday which encouraged people to enter the property market. The deadlines of the stamp duty holiday meant that many first time buyers were in a hurry to get on the property ladder before June 2021 and September 2021.

This period also followed a property market freeze caused by the coronavirus pandemic and national lockdowns. Since the peak of the UK property market in September 2021, level of sales has returned to pre-pandemic level.

Refinancing and secured loans

With property prices increasing and for many, the dream of up-sizing seemingly further away than ever before, for those that do already own a property, refinancing their property in the form of a mortgage to invest into the property is becoming more common. For example, for a family living in a 4 bedroom property looking to up-size to a 5 or 6 bed home, a loft conversion may provide a viable alternative when moving is not possible.

Thus, remortgaging the property in question or taking out another form of a UK secured loan, may be preferable in the short to medium term than looking for a property on the over-inflated property market.

Off-market property sales

One trend that has become clear in recent months is that there have been a record number of homes sold off-market, especially in London. The rise in private listings of houses has increased hugely; in 2022, one in ten homes have sold without coming to market. Those who have privately advertised their property have also benefited from higher asking prices. The volume of homes being sold off-market is at the highest level since 2015.

Are house prices changing?

House prices are constantly fluctuating and it is generally considered that house prices double every 10 years. It is debatable whether or not that is true, but what is clear is that in the last year, house prices have risen considerably. This is partly due to the volatility caused by the stamp duty holiday and the pandemic. In March 2022, the average property price in the UK had risen by 9.8% to an average price of £278,436.

For many people in the UK, with house prices rising and being able to get a property that bit more difficult, changing careers is a preferable move to giving up on getting the dream property. One approach to changing jobs is moving from a profession which is purely salary-focused to one which is boosted by commissions and bonuses. This means that the likes of commodity headhunters are seeing an increase in candidates to both work as recruiters as well as those looking to change jobs and move into a commission and codities based or banking based job role.

Is the property market going to slow down?

Following the surge in the property market experienced in 2021, there is now a misalignment between supply and demand. Estate agents Savills recently commissioned a survey which found that 9 in 10 house-hunters are finding there to b e a lack of suitable properties available. One of the reasons for this is a lack of affordable housing and overpriced properties.

How is the current economy impacting the UK housing market?

The UK is currently undergoing a period of high inflation with some of the highest inflation rates experienced in decades. Like with any other good or service during times of high inflation, house prices have also become more expensive. This also means that it is more expensive to borrow so fewer people are able to afford mortgages and enter the property market.

During this period of inflation it also means that housing construction costs more as materials, supplies, land and labour costs are all higher. These costs are usually absorbed by the homebuyers meaning that property prices are more expensive.

Another result of high inflation is a higher likelihood of increased interest rates. If this should occur, it becomes more difficult to purchase a home. Mortgage rates become more expensive and thus it becomes less affordable to buy a property. This also impacts sellers as it means that in order to sell, they may need to lower their asking price, which subsequently may impact what they can buy.

What will happen to the UK housing market for the second half of 2022?

Housing experts predict that the growth of house price increase will begin to slow down in the coming months. Zoopla, the property portal, forecasts a 3% rise for 2022, similar to the predictions of Savills who have forecasted 3.5%.