The housing market has boomed over the last decade with prices increasing by 10% on average year after year. Recently there’s been a slight dip in property prices which is leading some to believe that a significant drop is on the horizon. Let’s take a look at why properties are so expensive right now and what to expect from house prices in 2023.
Why Are UK House Prices So High?
The average price of a home in the UK is 60% higher than it was ten years ago. A shortage of properties is a major reason for this. When demand is high, prices go up. Plus, low-interest rates have made mortgage products affordable, which means more people are able to buy property. This further contributes to high demand and high prices.
House Prices In the UK Now
In the second half of 2020 house prices began to rise dramatically until they reached record highs in the first half of 2022. However, recent data shows a 1.3% dip in prices between July and August 2022. This could be down to the rising cost of living making it tricky for people to save deposits, plus rising interest rates making it less affordable to borrow. Demand has dropped and so have prices.
Variation In House Prices
Price growth rates vary across different regions and different types of properties. For example, London is the slowest area for price growth in the UK, but it’s still the most expensive place to buy a property with the average price being £520,000, which is nearly twice as much as the UK average. Wales is the fastest-growing region, with house prices increasing by more than 15% each year. New build properties are 26.5% higher than they were last year, and semi-detached homes are 13.6% more expensive than last year.
Will There Be a Fall in House Prices In 2023?
Predictions for house prices in 2023 suggest that a major fall is highly unlikely. Inflation and the cost-of-living crisis means people will have less disposable income in the coming year, and this is likely to reduce demand for housing. However, a fall in demand is unlikely to cause a significant crash in the housing market in 2023. Rather than a fall, we can expect house price growth to simply slow down compared to the last few years.
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