Andrew Bailey is the 'worst Bank of England boss' says Malone
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Since the Bank of England (BoE) raised the base rate to a 14-year high in its bid to tackle inflation, demand in the overheated property market has begun to cool off. The latest data show average asking prices in some postcodes have been slashed by over £300,000. But what about your area? Find out if your home is on track to lose value in 2023 with Express.co.uk’s interactive map.
House prices in the UK have been going since the financial crisis, but the pace accelerated in the latter half of 2020 as pent-up demand for space was released into the market.
The average UK home fetched a record high of £296,000 in October – £33,000 more than a year before and almost triple that at the turn of the century.
Homes also became more unaffordable than ever – with price-to-income ratios now more than double mid-Nineties levels – leading to increased reliance on mortgages among buyers.
In the past few months, however, skyrocketing inflation and the institutional attempts to curb it have combined to push house prices over the edge.
READ MORE: Mortgage demand drops due to ‘rampant’ interest rates
Chris Hodgkinson, managing director of House Buyer Bureau, said: “We’ve seen house prices pushed to record highs during the pandemic, and with the market now cooling, it’s no surprise that property values are heading back down to earth.
“Overall this return to reality has been a steady one but when analysing the market at a more granular level, there are certainly some areas where property values have really fallen through the floor in the wake of September’s mini-budget.”
Sales analysis by House Buyer Bureau has revealed the postcodes in which average asking prices have already tumbled the most over the past four months.
The value of homes in the GU25 district of Runnymede, Surrey, was found to have plummeted more than anywhere else in the UK – falling £315,368 from roughly £1.9million in September to £1.6million today.
Enter your postcode into our interactive map below to see how far house prices have fallen in your neighbourhood…
The tax-slashing mini-budget cooked up by then-PM Liz Truss and her Chancellor Kwasi Kwarteng plunged the markets into turmoil and saw almost a thousand mortgage products being withdrawn from sale in a single day.
Over the past year, the base rate has been hiked nine times consecutively to hit 3.5 percent by mid-December – its highest since 2008 – and will likely be raised yet again on Thursday as the BoE continues to battle rising prices.
Mortgage rates hit their highest level since 2013 in November, reaching 3.35 percent, meaning households are now spending the greatest share of their income on mortgage payments since 1989.
As mortgages become prohibitively expensive and the cost-of-living crisis squeezes budgets ever-tighter, potential buyers across the country have been forced to shelve plans. Mortgage approvals fell to 46,100 in November, down from 57,900 the previous month and the lowest total since June 2020, according to data from the BoE.
A number of house price indices from Land Registry to Nationwide and Halifax have shown that the rate of house price growth has already started to slide in response to this collapsing demand.
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The second-largest asking price drop was found to be in the SO42 postcode of Hampshire’s New Forest – the average home in the district going from £1million to £781,257, a loss of £289,605.
This was followed by Worcester’s WR6 postcode (£143,804), Colchester’s CO8 district (£141,096), and KT24 addresses in Surrey (£135,092).
However, price variations over the past few months haven’t impacted where the most expensive properties in the country are to be found: eight out of ten of the most expensive postcodes remained comfortably in the London boroughs of Westminster and Kensington and Chelsea.
More than simply holding their value, houses in a handful of postcodes actually increased in price in defiance of the national trend. The average home in Staffordshire’s ST12 district was found to be £133,430 pricier than in September.
The next-biggest gains were made in the EC3 postcode of Tower Hamlets, London (£127,113), followed by PA6 in Renfrewshire, Scotland (£123,733).
Mr Hodgkinson added: “While we don’t anticipate this rot to set in across the entirety of the market, those currently pondering a move are advised to sell their home quickly if they wish to secure anywhere close to the pandemic highs of the last two years.”
According to Halifax – the UK’s largest mortgage provider – house prices fell 2.3 percent in November – the largest drop since the 2008 financial crisis – and by a further 1.5 percent in December.
The exact figure varies, but there is near-universal consensus that house prices will continue their downward run throughout 2023. Halifax expects prices to sink by eight percent, while Nationwide and online estate agent Zoopla predict a fall of five percent.
The Government’s fiscal watchdog – the Office for Budget Responsibility – expects prices to fall nine percent over the next two years. In mid-December, Bank of England Deputy Governor Jon Cunliffe claimed UK house prices could fall by as much as a fifth without causing distress to most homeowners.
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