Great Britain is on the verge of witnessing a different turn in its real estate market, with rental costs projected to surpass house prices by a significant 25% over the next four years, a report by Yahoo Finance has revealed.
According to the report, this prediction is a result of anticipated higher interest rates, according to report by a prominent residential estate agent.
Based on Hampton’s hunch, the downward trajectory of property prices will come to a halt in 2024. This optimistic outlook is reliant on the gradual reduction of mortgage rates and an increase in household incomes.
Why would house rent increase?
One contributing factor is the combination of lower yields and an increasing number of landlords relying on financing, which could place additional pressure on investor profits, particularly in the capital city.
The looming surge in interest rates is expected to drive a substantial 5.5% growth in property prices nationwide. This surge in interest rates will exert greater pressure on rental prices than on house prices.
Based on the Office for National Statistics (ONS) House Price Index, house prices are likely to experience a notable decline of 7.4%.
While this is significant, it is notably less severe compared to previous downturns, such as the 10.6% drop observed in 1990 and the 16.5% decline experienced in 2008.
Southern regions, which are anticipated to be hit the hardest by rising interest rates, are likely to witness the most substantial price decline this year. In particular, the South West is expected to experience a 4.0% drop, followed by the East of England with a 3.5% decline and the South East with a 3.0% decrease.
Wales is also expected to see a 4.0% decline in house prices, despite its previous strong performance, ranking high for price growth with an impressive 56% increase between 2015 and 2022.
What foreign experts are saying
- Aneisha Beveridge, head of research at Hamptons, commented on the market dynamics, stating, “Despite rising rates and the cost-of-living crunch catching many households off guard, it’s becoming increasingly clear that the house price crash that some forecasters envisioned hasn’t materialized.”
She further added that instead of a crash, the market is expected to witness a minor price fall in 2023, followed by a gradual recovery in subsequent years as households adapt to an era of higher interest rates.
While nominal house price falls may appear modest on paper, the impact is expected to be more pronounced in real terms.
What you should know
The UK remains the most preferred relocation destination for Nigerians a previous report by Nairametrics revealed, however, that the country has been battling a cost of living crisis putting residents on edge.
The British Commissioner recently said that the embassy had dished out about 132,000 visas without stating the number of applicants.
Source: Nairametrics
