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House prices will soon fall
Monday 24th October 2022
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Monday October 24 2022
The mortgage rate is more important than the price
By Isabelle Fraser,
ASSOCIATE MONEY EDITOR
House prices will soon fall – in fact, they may have already begun to dip. But due to how data is collected, you won't see the evidence in indices for some time. That, combined with rising mortgage rates which have priced out many buyers, means that property hunters are deserting the market in huge numbers. Website Zoopla has found that since the mini-Budget last month, demand has collapsed to below 2019 levels.
Even if property values do become more affordable, borrowing costs will limit what would-be buyers can spend. But they may have a window to take advantage of falling house prices and a more competitive mortgage market, writes Melissa Lawford. The catch: you'll have to wait until 2024.
House prices mean little in the equation; the crucial moment for affordability will be when mortgage rates fall significantly. Adrian Lowery, of Evelyn Partners financial planners, said: “The real cost of a house isn’t the price that you agree to pay, it’s what you pay across your mortgage. The actual price is the sale price and the price of credit together.”
There are signs that mortgage rate rises may have started to cool, as they have dropped for the first time since the mini-Budget. The long-term outlook is not clear, however, as much depends on what Rishi Sunak does at prime minister. If you're a cash buyer, or not fazed by soaring rates, there are ways to bag a bargain, as power dynamics shift from sellers to create a buyer's market. Alexa Phillips has asked the experts for their advice on how to negotiate steep discounts.
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