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UK Housing Market Faces Severe Downturn, Warns Property Expert

The UK housing market braces itself for a predicted sharp decline in property values, says Jonathan Rolande, a leading market commentator from the National Association of Property Buyers.

Rolande’s ominous prediction follows a cautionary warning from credit ratings agency Moody’s last week. The agency raised concerns over a potential 10 per cent drop in house prices over the next two years, signalling an impending market correction triggered by high inflation and a recent surge in lending rates.

Rolande, sharing Moody’s sentiments, stated, “Aspiring home buyers, landlords and owners are set to be hit with another round of interest rate hikes just as many thought that the worst was behind us. Stubborn inflation at nearly nine per cent – a long way from the two per cent target – may lead to a Bank of England rate increase later this month and mortgage lenders have started preparing for it.”

The preparation he refers to involves pulling many mortgage deals off the market and replacing them with higher-cost offerings. A mortgage of £250,000 is currently around £400 more expensive than it was just a year ago.

The property expert paints a bleak picture, particularly for sellers who are under pressure to sell their properties due to reasons such as divorce, probate, or financial problems. He explained, “Although the headline drop [currently] is only around three per cent the reality is much worse for sellers. Those that have a pressing reason to sell may struggle and have to reduce further.”

Furthermore, he voiced his apprehension over the gloomy future of UK house prices. He said, “It is difficult to see what might happen to stop the decline of UK house prices. With average prices failing to keep up with general inflation, it can be argued that property has already lost a substantial amount of value. It seems likely that the coming months will see further drops in prices, possibly wiping off a few percent or so by the end of the year.”

His biggest concern lies not just in the devaluation of homes, but the duration of this anticipated downturn. Rolande believes that Moody’s prediction of a 10 per cent drop over two years could very well be accurate.

“Many homeowners are already struggling to meet their commitments each month, often relying on savings to get them through. Once these are depleted, we may well begin to see the spectre of mortgage arrears and repossession once again,” he warned. This cautionary statement serves as a stark reminder for homeowners and potential buyers to tread carefully in the current volatile housing market.