Housing market and the cost of living l Vesta blog

Housing market and the cost of living

February 11, 2022

The Bank of England has once again raised interest rates to 0.5%. This is the second increase in three months, and they warned that surging energy bills would push inflation higher than expected, to more than 7% by April.

It is unlikely that either of these upward trends will have an immediate impact on the housing market in the short term, primarily because many people are already on fixed rates and first-time buyers have already collated their savings and deposit to get on to the property ladder.

However, over the medium to longer-term, based on historic insight, the upward trend on interest rates and inflation will most likely dampen the housing market. In addition, many of the mortgage providers will start to tighten their lending criteria to protect against any potential house price correction.

Following similar inflation and rate increases, New Zealand-based mortgage lenders had indicated that there had been a drop in mortgage applications in the three months prior to the festive period. The latest insight shows that first-time buyer demand in the country has now also dropped significantly and in addition, property prices have started to plateau, and in some areas have started to drop.

Demand here in the UK is still very strong, especially for investment property where rental prices are also increasing in most locations. The Government will be watching what happens with housing and prices very carefully as this is such an important component of our economy.

At Vesta we have been inundated in buy enquiries from a wide range of buyers including individuals, funds, and institutions. Property prices are still strong, and the increasing demand means good prices are being achieved across the board.

If you are considering selling or buying an investment property or simply want an investment valuation, please get in touch, or visit www.vestaproperty.com/sell so we can start the process with you.

Important Note

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