Home Sales In UK Expected to Drop to the Lowest Level in More Than a Decade

credit: theguardian

UK (Parliament Politic Magazine) – The number of houses sold in the UK this year is expected to be the lowest since 2012, as reported by the property website Zoopla. About one million sales are predicted to happen this year, which is almost 20% less than the number in 2022.

Mortgage and rent prices have gone up a lot since banks started charging higher interest on loans. Houses that are bought with cash, where buyers don’t need a loan, are likely to do better in this situation.

Usually, about a third of all the houses sold each year are bought by people who use a mortgage. According to Zoopla, these buyers are now more likely to wait until the interest rates become better, even though house prices are dropping in some parts of the UK.

Less People Getting Mortgages

A new report from the Bank of England on Wednesday showed that the number of mortgages approved in the UK fell by almost 10% in July. This happened because people wanting to buy homes found it harder to pass the tests to see if they can afford the payments.

In July, fewer people were allowed to borrow money to buy houses. In June, around 54,600 people got permission, but in July, only 49,400 did. However, more people were allowed to change their mortgage to a different one.

If you want to borrow money for a house, the average cost for a special kind of loan (called a “two-year fixed mortgage deal”) is now 6.74%. If you want a longer deal for five years, it’s 6.22%.

Borrowing money for a house is much more expensive now than it was before. A while ago, many people could borrow at rates lower than 2%.

The Bank of England, which helps manage money in the country, has made borrowing money more expensive by increasing something called the “benchmark rate.” They’ve done this 14 times in a row, and now it’s at 5.25%. They’re doing this to try to stop house prices from going up too fast.

Cost Of Borrwing Money For Houses Has Gone Up

According to a website called Zoopla, houses that are smaller and cheaper are not being affected as much as bigger houses with three or four bedrooms. It’s also become harder for people who want to buy homes to rent out to do so, because the cost of borrowing money for those homes has gone up.

Renting a home has also become more expensive. This is happening because landlords, the people who own the homes, are charging more rent to cover the higher costs of their own mortgages. This is making it difficult for many people to find homes they can afford to rent.

Richard Donnell, a person who helps run Zoopla, said that house prices are dropping more in the south of England. This is because the cost of borrowing money for houses is higher there, making it hard for many people to buy homes. This is also making fewer people want to buy houses.

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Houses Prices Are A Bit Higher Than Last Year

Even though house prices in the whole UK are a tiny bit higher compared to last year, it’s the number of houses being sold that is affected the most. People who need to borrow money to buy houses are having a harder time doing so because of higher borrowing costs.

According to a group called Halifax, buying a house in London is not affordable for many people. Houses there cost 9.3 times the amount of money people usually earn, and almost half of what they earn goes towards paying for the mortgage.

In the North East of England and in Scotland, houses are more affordable. The prices there are around 4.9 to 5 times the usual earnings. In one place called Inverclyde, homes only cost 2.9 times what people earn, and it’s considered the most affordable place to buy a home.

A person named Jackie Quinn, who helps people buy and sell homes, said that in the area where she works, which includes places like Epsom and Leatherhead, house prices have gone down in the last six months. 

Beth Malcolm

Beth Malcolm is Scottish based Journalist at Heriot-Watt University studying French and British Sign Language. She is originally from the north west of England but is living in Edinburgh to complete her studies.