Lack of UK housing supply
The lack of housing supply, super-low borrowing costs and demand for outside space led to fast-paced growth in property prices. But will UK House Prices Drop In 2022 – 2023?
The UK’s new home target is to build 300,000 new homes annually by the mid-2020s. Currently, the UK is building circa 200,000 homes a year. This is a significant shortfall to overcome, and increasing construction costs and planning delays will exacerbate this issue.
It is hard to see how there would be a property crash when in real terms, prices are in line with inflation, and the shortfall in property stock remains a persistent problem. Interest rates may temper buyer enthusiasm; however, in historical terms, borrowing costs present reasonable value.
Looking forward to 2023, should inflation not fall and interest rates continue to rise, property values may see a correction to compensate for additional finance costs. However, this may not be the case if inflation subsides and interest rates remain relatively attractive.
will there be a correction in the housing market?
We may see short-term corrections in regional locations, where buyers fought over idyllic property and areas during the pandemic. Second homes being costly to run and office routines back in full swing may cause a slump in demand for the country and holiday home market. A compensating factor for the market in general may be the relatively weak pound and the international appeal of London. This may entice foreign property investment into the capital.
are rents going up in 2022?
The supply of property is also affecting the rental market. Landlords have faced increased tax bills and now higher mortgage costs, which will mean higher rents are necessary for them to trade. Many landlords have restructured their properties to HMOs to realise better returns, increasing the number of bedrooms and letting to students or professional sharers over families. The losers are families who suffer as a result of diminished housing stock, and of the available property, asking rents will be higher.
Thinking of purchasing a property?
The property market is ever-changing and mortgage rates are generally increasing. However, there are good mortgage options out there and our team are keen to ensure you achieve the best overall solution. Please do not hesitate to contact us with any mortgage questions.