UK real estate prices: Is a decline inevitable?
Seeing a recession in the UK now seems inevitable after the UK economists had warned of a decline in real estate prices due to the surge in the interest rates. The government’s new economic plan will lead to an even greater rise in interest rates, taking them to the highest levels since 2008!
Bank of England had recently raised the interest rates by 50 points from 1.75%, reaching 2.25%. Meanwhile, the stock markets witnessed their worst days on Friday, 23 September, and the pound value had decreased by 3.5% in one day.
This will not be the end of the increasing saga, the interest rate is expected to reach 2.75% by the end of 2022, and more than 3% by next year.
Real estate prices are increasing in the UK
Concerns and worries about the high levels of inflation yet to come had increased among the people. The borrowing costs will also increase affecting the people that were wishing to get a mortgage, especially investors from outside the United Kingdom, which will impact the property market in Britain.
And with UK household income shrinking, mortgage costs and prices rising, and energy prices rising, the number of homebuyers is likely to drop dramatically in the coming months.
The real estate market is still going at the moment in the UK as locals are attempting to buy a house before the interest rates increase again. But the percentage of Arab buyers has decreased by a large percentage and many of them expressed their concern about the economic situation in Britain.
And keeping in mind the £2,500 energy price cap promised by new Prime Minister Liz Truss this fall, energy bills will double from what they were last year.
The Bank of England is expected to raise borrowing costs again this week to combat inflation despite the gloomy economic outlook by at least 50bps from 1.75%.
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