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Estate agents hold “For Sale” and “For Sale” signs outside residential properties in the Maida Vale district of London, UK on Thursday, June 30, 2022.
Bloomberg | Bloomberg | Getty Images
Demand for UK residential properties almost halved following the September government budget that rattled financial markets and left the prime minister reeling, research showed on Monday.
The fiscal package announced on Sept. 23 led to a selloff in bonds and predictions of a possible housing market crash as interest rate expectations rose sharply. In the wake of the Budget, a record number of mortgage deals were pulled and many lenders halted offerings, assessing volatility.
According to property website Zoopla, buyer demand fell 44% year-on-year in the four weeks to November 20, while new property sales fell 28%. The stock of homes for sale rose 40% over the same period.
Zoopla said demand fell to levels typically seen during Christmas – among the quietest times for property markets – as buyers waited to assess the outlook for mortgages with their own jobs and wages.
Richard Donnell, Zooplan’s executive director for research, said the company expects home prices to fall by 5% in 2023.
“But sales numbers will remain buoyant for a range of structural, demographic and economic factors,” he said, adding that the average number of homes on offer per estate agency is still a fifth less than before the pandemic, including the ongoing housing shortage. .
Although house prices are widely predicted to fall, the company’s forecasts are less bearish than others.
Economists at Pantheon Macroeconomics forecast a fall of 8% over the next year, while Nationwide, one of the UK’s biggest mortgage providers, said earlier this month that house prices could collapse by up to 30% in its worst-case scenario.
In contrast, the UK’s Office for Budget Responsibility said it expects house prices to fall by 1.2% next year and by 5.7% in 2024.
It comes after demand for a variety of property types during the pandemic, the suspension of the purchase tax on homes priced under $500,000 from July 2020 to July 2021, and an ongoing supply shortage pushed home prices to record highs.
Zoopla said there is currently an “extensive” recovery of homes, but modest in size. That represents 7.8% year-on-year growth in UK house prices.
Its report described market trends as “a shake-out rather than a pre-cursor to a housing crash” and said the mini-budget had “shocked” sellers and buyers.
“All the leading supply and demand indicators we measure continue to point to a rapid slowdown from very strong market conditions. We see no evidence of forced sales or the need for a large, double-digit reset in UK house prices in 2023.” said in its report.
Meanwhile, private rental costs in Britain have risen amid fierce competition for properties, according to separate data published by the Rightmove website last month.
It found that rents in London rose by 16.1% year-on-year, the highest growth of any region on record.
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