Last Updated on November 15, 2022 by Bitfinsider
The U.K. real estate market may be on the verge of a significant fall, with some market analysts predicting a collapse in prices of up to 30 percent as evidence points to the steepest decline in demand since the Global Financial Crisis.
In October, new homebuyer inquiries fell to their lowest level since the 2008 financial crisis, except the period during the first Covid-19 lockout, according to the latest report from RICS housing surveyors.
The MSCI UK Quarterly Property Index, which measures retail, commercial, industrial, and residential property, declined 4.3% in the three months leading up to September, the sector’s worst performance since 2009.
The market slump is a respite from a two-year, pandemic-induced home buying frenzy, with property transactions in September decreasing 32% annually from a 2021 peak.
However, as the age of easy money winds down and the Bank of England pushes down on inflation-inducing rate hikes in response to the messy mini-budget, many believe the slump could be more severe than anticipated.
Thursday, Kallum Pickering, senior economist at Berenberg, said about the U.K. market, “Although a housing price correction is generally predicted as part of the protracted recession, it appears to be developing faster than anticipated.”
The investment bank now anticipates a 10% decline in U.K. real estate prices by the second quarter of 2023. But some lenders are less sanguine.
Nationwide, one of the top mortgage companies in the United Kingdom, predicted earlier this month that property values might fall by as much as 30 percent in the worst-case scenario. Meanwhile, the most pessimistic forecasts for 2023 from banks Lloyds and Barclays predict declines of about 18% to over 22%, respectively.
In fact, prices have already begun to decline in some areas, according to the property search website Rightmove, which reported on Monday that sellers lowered prices by 1.1% in October, bringing the average price of a newly-marketed home to £366,999 ($431,000).
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