June 2023 Property Market Update

The turbulence in the UK housing market is showing no signs of slowing down, with mortgage rates continuing to rise, which is having a knock-on effect for renters. Read on to find out all the latest UK property market news.

Mortgage Rates Set To Continue Rising

Borrowers are being warned to brace themselves for further increases in mortgage rates over the coming months as the Bank of England struggles to curb high inflation.

The average interest on a fixed-rate mortgage is currently hovering at around 6%, with lenders withdrawing deals and raising rates relentlessly. To put this figure into context, a year ago, fixed-rate mortgages were available with an interest rate of around 3%.

The Bank of England announced another base interest rate rise on 22nd June, by a half point to 5% which will lead to even bigger mortgage repayments for the estimated 1.5 million homeowners whose fixed rates are coming to an end before the end of the year.

Any further rate increases are also likely to squeeze a number of first-time buyers out of the market as monthly repayments reach unaffordable levels for many.

Effect on South Hams Market

Although we are still seeing strong demand for properties in the area we are being affected by the general market change.

We have quite a few offers that would be seriously considered by our clients but the potential buyers are having trouble in securing a sale on their own properties in other parts of the country.

Renters To Be Hit By Rising Mortgage Rates

It’s not just homeowners feeling the squeeze from rising mortgage rates. Research from one of the UK’s leading estate agents, Savills, has revealed that landlords are making their lowest profits for 16 years, with many looking to leave the sector.

At their peak, some landlords were making profits of as much as 23%, as low interest rates and attractive buy-to-let mortgages kept repayments low. However, many investors are now reporting profits below 4% – the lowest since 2007.

The findings are backed up by the Bank of England, which recently published figures that show the proportion of mortgages advanced to buy-to-let investors is at its lowest level since 2011.

Any influx of properties onto the market could lead to a drop in the number of homes available to rent, and, therefore an increase in rental prices as demand outstrips supply.

House Prices See First Annual Fall In 11 Years

The UK’s largest lender, Halifax, has announced a 1% fall in house prices compared with a year ago – the first drop since 2012.

According to their figures, prices are currently £3,000 lower than 12 months ago, and £7,500 lower than their peak in August, with current average property prices standing at £286,532.

Rival lender, Nationwide, has reported an even more significant drop in prices, with an annual fall of 3.4%, according to their data – the largest drop in 14 years.

While first-time buyers usually welcome a price fall, the continuing rise in interest rates is pushing monthly repayments out of reach for many would-be buyers. This comes at a time when the increased cost of living is also impacting their ability to save for a deposit.

Cheapest Cities For First-Time Buyers Revealed

A study by property website Rightmove has revealed the cheapest cities for first-time buyers to get a foot on the property ladder.

The average UK asking price for a first-time buyer property – a home with two bedrooms or less – is £226,399, and using this figure, they’ve scoured the UK to find the cities that offer the most for your money, with the top five all sitting comfortably less than half the national average.

Top of the pile is the West Yorkshire city of Bradford, where you can pick up a first-time buyer property for £104,643 on average. Carlisle in Cumbria is only marginally behind at £104,784.

The rest of the top 5 comprises Aberdeen, Hull and Dundee, the most expensive at £111,415 – still well below the national average.

For more local property news and updates and a more detailed overview of the property market in Devon, get in touch with Chartsedge. We are your local property experts. Call us on 01803 505115 or email info@chartsedge.co.uk.