New data from Zoopla’s House Price Index and Halifax’s pandemic property report highlight the challenges prospective homebuyers face in the UK, Myron Jobson, senior personal finance analyst at interactive investor, has warned.
The housing market has slowed down significantly due to high inflation, falling real wages, and rising mortgage rates, resulting in sellers accepting substantial discounts of around £14,000 on average to secure sales, according to Zoopla.
While Halifax’s study has revealed the pandemic’s transformative effect on the UK’s property market, with house prices rising much faster than wages, making homes increasingly unaffordable.
The stamp duty holiday further fuelled the growth of house prices, and once it ended, the low stock of homes and a strong labour market helped push property prices higher.
Location continues to be a significant driver of house price growth, with the pandemic-induced “race for space” likely contributing to Wales recording the strongest house price growth of any UK region or nation since the start of 2020, according to the report.
Conversely, demand for smaller properties in more urban areas declined during the pandemic, particularly in London.
And Jobson warns that despite the recent slowdown, house prices remain too high for many aspiring homeowners.
He added: “Despite the slowdown in recent months, house prices still remain far too high for many wannabe buyers.
“Dreams of homeownership have been shattered by a perfect storm of high property prices, rampant inflation and a rise in mortgage rates to levels not seen since the financial crisis.
“Fast-rising rents are not offering any relief and could keep some wannabe homeowners in the hunt for a home for longer than they would like.”
