Jonathan Rolande, a leading market analyst from the National Association of Property Buyers, has predicted a sharp decline in UK property values. His troubling forecast follows a cautionary warning from Moody’s, the prominent credit ratings agency. Moody’s voiced concerns last week about a possible 10 per cent drop in house prices over the coming two years, signifying an imminent market adjustment instigated by towering inflation and a recent upswing in lending rates.
Echoing Moody’s anxieties, Rolande declared, “Aspiring home buyers, landlords and owners are poised to confront another wave of interest rate rises just as many believed the worst was over. Stubborn inflation hovering near nine per cent – a far cry from the two per cent target – might prompt a Bank of England rate rise later this month. Mortgage lenders are already girding for this.”
The readiness he mentions encompasses the removal of many mortgage deals from the market, to be supplanted with more expensive alternatives. A £250,000 mortgage currently costs approximately £400 more than it did a mere year ago.
Rolande illustrates a grim outlook, particularly for sellers under pressure to offload their properties due to divorce, probate, or financial difficulties. He elaborated, “While the headline decrease is presently around three per cent, the true picture is considerably worse for sellers. Those compelled to sell due to urgent circumstances may find it hard and need to reduce further.”
He expressed grave concerns about the gloomy trajectory of UK house prices, stating, “It is tough to envision what could halt the UK house price plunge. With average prices lagging behind overall inflation, it could be posited that property has already shed a significant chunk of its value. The upcoming months will likely see further price declines, possibly shaving off several percentage points by year-end.”
His most significant worry doesn’t merely lie in the depreciation of homes, but in the duration of this expected downturn. Rolande is of the opinion that Moody’s prediction of a 10 per cent slump over two years could well hold water.
“Numerous homeowners are already wrestling with fulfilling their monthly commitments, frequently resorting to savings for survival. Once these are exhausted, we might begin to witness the grim prospect of mortgage arrears and repossession reemerging,” he cautioned. This stark warning serves as a poignant reminder for homeowners and potential buyers to proceed with caution in the currently turbulent housing market.
