The UK property market started the week on a sombre financial note as Rightmove, a leading online real estate company, announced the asking price rose by only 0.5%. This is the slowest price rate hike for this time of the year since the financial crash in 2008.
UK property prices rising at a snail’s pace
Market specialists attributed the phenomenon to the effect of higher interest rates. According to Rightmove data, house prices fell by 0.8% and agreed house sales declined by 17% during the 12 months leading up to October.
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In an attempt to bring inflation under control, the Bank of England raised interest rates 14 times in a row. During its September interest meeting, the institution kept the rate at 5.25%. This is, however, still the highest the interest has been since the 2008 catastrophe.
The situation also impacts renters, who face higher-priced leases as landlords battle to keep up with their mortgage payments. Other data shows that the average rent in Great Britain rose to £1,325 per month from £1,186 according to year-on-year analyses. Rightmove’s property expert, Tim Bannister, said:
Some sellers are pricing more competitively, but estate agents are reporting that others still need to adjust their expectations on the price they’re likely to achieve in this lower-activity market, where six in ten homes are now selling. In the busy post-pandemic market, we were seeing eight in ten sold.
The Guardian, citing a Hamptons analysis on UK and the Bank of England data, shows that landlords pay 40% for mortgage interest as of August 2022. The company also predicted that interest costs could escalate to approximately £20bn as fixed-interest periods come to an end.
