House prices fall as market slows

Published: 21/11/2022

The property market across the UK had been in a great position before the recent covid pandemic, with house prices soaring. Estate agents in the last decade saw demand increase and house prices soar year-on-year. Unfortunately, it now seems as though the cost-of-living crisis has created a shift in the market. House prices are starting to fall as the market slows.

In mid-2022, growth hit a stumbling block and since then, the property market has continued to slow. The downturn isn’t massive in terms of property values being halved but the effect is still significant. So, why is the market slowing down, and is it time to buy, sell, or rent?

Uncertain times

Markets were rocked by financial statements made by the UK government and that caused greater instability. It saw mortgage prices and interest rates soaring to unprecedented levels. Affordable housing was stretched further because borrowing soared, and inflation only added to the trouble. Estate agents have properties available – and the demand remains high for affordable housing – but people just can’t afford the rising mortgage costs. Then there is stamp duty to consider.

The property market isn’t stable because of the uncertain times we live in. Estate agents and mortgage lenders have limited options available to new renters and buyers.

Is the property market stable enough to sell your home?

It's always worth talking to estate agents and getting a free home estimation value done if you want or need to sell your home. The issue is that since house prices are falling slightly, your home’s worth must be enough to cover the mortgage. For example, you purchased a home four years ago for £275,000. There is a balance of £257,000 left to pay. The monthly mortgage payments have increased by £350, and the home’s estimated value is worth £250.000.

That leaves you with a shortfall of £7,000, plus whatever fees you have to pay. While your home’s value is unlikely to decrease by quite as much, anything is possible. You must ensure the value covers the property’s mortgage. That doesn’t mean a profit can’t still be made on the home, especially if there is demand in your area.

Is now the time to buy?

Buying a property can be a great idea if you have a large deposit and a good-paying job (enough to cover the mortgage payment, anyway). House prices have fallen because the property market has slowed. It means now is the time to speak to estate agents and find out what properties are available. Of course, it’s not quite a buyer’s market as inflation is hitting regular buyers hard.

Private rent is very expensive

Estate agents are in demand as more people turn to renting a property. Unfortunately, the property market – or the private rent sector – isn’t ideal for most renters. The trouble is that many landlords face an increase in mortgage fees, and many want to get a high annual yield. It means rental prices are soaring too, with some being priced out of the rental market. Of course, it depends on the location and the type of home being rented.

Will the market bounce back?

Many estate agents believe the property market will eventually bounce back and be stronger than ever, but when it’ll happen is anyone’s guess. House prices are falling because the market is slowing and that has ramifications for a considerable period. It might not just be for a few months, but years. That’s the scary part of the markets; you can’t predict them.
The power of the markets

House prices might continue to fall over the next year or so, and it’s partly down to the cost-of-living crisis, inflation, and soaring interest rates. It doesn’t look promising, but as the old saying goes, ‘there’s light at the end of the tunnel’. Estate agents believe the market will turn around, but the trick is when that’ll happen. The property market isn’t in an inconsolable state, but it might take a long time before it fully recovers.