UK HOUSING PRICES SOAR
LHA London Ltd
11 Belgrave Road
London SW1V 1RB
442039115656
England’s housing market is currently in a state of flux.
Prices rose quickly over the past two years due to the pandemic. The
government issued an emergency tax break to support the economy,
and it caused house prices to rise.
Buyers rushed to take advantage of incentives to get larger homes
that could cater to working from home. Some properties went way
over the asking prices.
The Bank of England increased the based interest rate six times
since December of 2021. The most recent was in early August. It rose
by 0.5 percentage points, making it the largest single increase in
over two decades.
Many buyers responded to the rising costs, either by accelerating
moves to new properties or by abandoning them.
Higher Costs of Living
Most lenders hesitate to offer low interest rates in the market, as
they seek to protect their service levels and want to be able to move
prices up accordingly. This encourages them to increase their rates,
causing buyers to panic.
It isn’t just the increase in borrowing costs that’s worrisome. The
economy is deteriorating, forecasters predict that energy bills for
the typical household will exceed £5,000 by the first half of 2023.
This is more than triple the cost of energy at the start of 2022.
During the past decade, rising prices and tighter regulations made it
more challenging to raise a deposit.
That is why the government introduced the Help to Buy scheme in
2013. They provide 20 per cent a property’s value, or 40 per cent in
London, as an equity loan while the buyer need only pay as little as
5 per cent as a deposit.
This scheme helped many first-time buyers purchase homes.
However, it has been criticised for inflating prices, as housebuilders
charged more for Help to Buy-eligible homes as they knew buyers
would only have to pay a small deposit.
Additionally, Help to Buy ends next year, so it will become more
difficult for buyers to purchase homes now that prices are higher.
Higher Deposits for First-