UK property demand slides 44% after market-rocking mini-budget, study shows

Estate agents hold “sold out” and “for sale” signs outside residential properties in the Maida Vale district of London, Britain, Thursday, June 30, 2022.

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Demand for UK residential property has nearly halved following the September government budget which hit financial markets and dropped the prime ministerResearch showed Monday.

Due to the fiscal package announced on 23 September a selling bonds and led predictions Interest rate expectations rose sharply as did a possible housing market crash. In view of the budget, a Record number of mortgage deals drawn up And many lenders withheld the offering as they assessed the volatility.

Buyer demand fell 44% year-on-year in the four weeks to 20 November. According to property website Zoopla, while new property sales declined by 28%. The stock of homes for sale had increased by 40% during the same period.

Zoopla said demand had fallen to levels typically seen during Christmas – among the quietest times for property markets – as buyers waited to assess their jobs and wages as well as the outlook for mortgages. Were.

Richard Donnell, Zoopla’s executive director for research, said the company expects home prices to decline by up to 5% in 2023.

“But sales numbers will remain buoyant thanks to a range of structural, demographic and economic factors,” he said, including the ongoing housing shortage, with the average number of homes on offer per estate agency still a fifth less than before the pandemic. Is. ,

Although a decline in home prices has been widely predicted, the company’s predictions are less bearish than others.

Economists at Pantheon Macroeconomics forecast an 8% decline next year, while Nationwide, one of the UK’s largest mortgage providers, said earlier this month In a worst-case scenario, house prices could fall by up to 30%.

In contrast, the UK’s Office of Budget Responsibility has said it expects house prices to fall by 1.2% next year and 5.7% in 2024.

This comes after the demand for a variety of assets during the pandemic saw the suspension of the purchase tax on homes under $500,000 from July 2020 to July 2021 and home prices plummeted due to a lack of supply rocket to record high,

Zoopla said an “extensive” re-evaluation of the homes is currently taking place, but it was modest in size. This puts UK house price growth year-on-year at 7.8%.

Its report described market trends as a “shake-out rather than a pre-cursor to the housing crash” and said the mini-budget “gave a jolt” to sellers and buyers.

“All the leading supply and demand indicators we measure point to a sharp downturn from very strong market conditions. We see no evidence of a forced sale or the need for a large, double-digit reset in UK house prices in 2023 Do not seem.” It has been said in its report.

Meanwhile, private rental costs in the UK have reached record highs amid intense competition for properties, according to separate figures published by website Rightmove last month.

It found that rents in London rose by 16.1% year-on-year, the highest recorded increase of any region.