Will there be a house price crash? | The Sun

HOUSE prices have been fairly stagnant over the past few months, according to the Office for National Statistics (ONS).

Recent figures show UK house prices increased by just 0.2% on average in the 12 months to August.

It comes after the Bank of England paused hiking interest rates last month, following 15 consecutive increases since December 2021 when they were at a historic low.

But what does that mean for house prices for the remainder of the year?

Tom Bill, head of UK residential research at Knight Frank, said: “While mortgage rates have stabilised, house prices will continue to come under pressure as monthly mortgage costs rise sharply.

“That said, we think most of the price correction will happen this year and demand will strengthen in 2024 as economic sentiment improves."

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Although Mr Bill did say that activity may "stutter" ahead of next year’s general election but modest single-digit annual growth should return from 2025.

Generally, you’d need to save at least 5% of the cost of the home you’d like to buy for the deposit – although there are exceptions.

With the cost of living crisis squeezing incomes for homeowners and first-time buyers alike, moving may be at the bottom of the list of concerns.

Property prices surged last year due to a rise in demand at the end of the stamp duty holiday.

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But rising prices were also attributed to Covid-19 and a lack of housing stock.

The average UK house price was £291,000 in August, which was little changed from a year earlier, but £9,000 above a recent low point in March 2023, the ONS said.

ONS head of housing market indices Aimee North said: “UK average house prices are little changed from a year ago, but annual inflation is rising in Scotland.

“In the year to August, average house prices rose fastest in the North East, but fell across southern and eastern England.

“UK rental prices continue to surge reaching record highs for the 18th month in a row.”

It said that the number of available properties for sale is also 12% lower than at this time in 2019.

Property prices came under immense pressure after mortgage rates shot up following the disastrous mini-Budget a year ago and amid soaring inflation, which sat at 11.1% last October.

Fresh figures released this month show that inflation stuck at 6.7% in September after slowly dropping over the past few months.

So with all this going on, what does it mean for house prices, and will there be a crash any time soon?

Will there be a house price crash?

The last time property prices crashed was during the global financial crisis.

UK house prices reached an average of £190,032 in September 2007 and had dropped to £154,417 by February 2009 – a fall of more than 18%.

They did not regain that peak until August 2014.

Rising interest rates over the last year have caused mortgage rates to skyrocket, leading to house prices dropping.

Graham Cox, founder of Bristol-based broker, SelfEmployedMortgageHub.com said: “Buyers are understandably adopting a wait-and-see approach, hoping for lower house prices and mortgage rates.

"The former is nailed on, the latter may take a little while yet as inflationary pressures, based on today’s data, persist.”

Emily Williams, director of research at Savills said: “Easing mortgage rates, boosted by a more positive outlook for the rate of inflation, means there should be capacity for the market to return to growth in the second half of 2024.”

Of course, no one can predict for sure what will happen to house prices, but here's what experts say is going on the market right now.

It's always worth noting that predictions are just that and that no one can say for sure.

The cut to stamp duty by the government could boost house prices.

But the government has confirmed that it will axe the stamp duty cut from March 31, 2025.

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Our mortgage payment calculator can help you work out how much you can afford to borrow to buy a home.

And our My First Home series reveals each week how first-time buyers have got a foot on the ladder.

Do you have a money problem that needs sorting? Get in touch by emailing [email protected].

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