Well, we don’t have a crystal ball here at Devon Herald, but we have taken a look at some of the stuff thats going on in the world. If you’re weighing up whether you should buy a house in Devon, or anywhere in the UK for that matter, it is a tricky time.
And with news of rocky roads ahead in terms of global finance, you might be wondering if the prices of houses in the UK are going to come down.
Here is our take on it.
The housing market has levelled out in Q3/Q4 of 2022
After crazy gains during 2021 and 2022, house prices have started to level out. What does this mean? Put simply it means that asking prices are not necessarily being exceeded, there are less houses going to market at the moment – so less people are selling, but equally, less people are buying.
To add to that, inflation rates have gone up for the first time in nearly 20 years, and people on non-fixed mortgages are starting to nervously adjust their collars.
If you’re thinking of buying a house at the moment, you may also have noticed that mortgage rates have gone up. In short, borrowing is not as cheap as it was, so now you need to either stump up more of a deposit or be prepared to pay more on your monthly mortgage.
And considering we’re now staring at the winter of ‘the cost of living crisis’, chances are that those marginal borrowers are not going to hit the market any time soon.
Global insecurity
The ongoing war in Ukraine and the increase in fuel prices has been partly to blame for the levelling out of the house prices in the UK. But it’s another market in the USA which is going to cause shockwaves.
It’s widely tipped that the American housing market is about to tank. You may remember that this happened in 2008, bringing down the UK housing market with it. The likely cause of this is the usual issues with interest rate rises and defaults on already subprime mortgages, not to mention the same issues we’re having here in the UK with inflated living costs.
Food and fuel in the US have been particularly hiked, and the Americans are looking at some testing times in some of their biggest cities property markets.
Will there definitely be a crash? And when will it happen?
Well, it’s hard to say with certainty. But it’s thought that if anything does happen, it will most likely occur in early 2023.
Will UK house prices come down?
As the price of UK housing stock is already overextended, it stands to reason that there will be a dip in the cost of houses – crash or not.
In 2008, the crash resulted in an average of 21% being wiped off house values.
Will that happen in 2023? Again, it’s hard to say.
The UK housing market has strong demand, even in downturns. But the country has also been one of the worst hit, economically, by the post-Covid landscape, not to mention Brexit and the cost of living crisis. So it’s a reasonably safe bet to say that yes, the UK’s average house price is going to come down in 2023 and beyond.
Will there be a crash? Again, hard to predict, but experts are saying unlikely. It’s more likely that the dip will be prolonged over the next couple of years, at least in 2025 allowing for an economic reversal.
By how much? It’s hard to say – and who knows what other issues may happen. But it’s as good a time as any to start adding more to your savings for a deposit.
