top of page

Perception vs Reality: UK property in September 2022

As the UK housing market settles into pre-pandemic norms and adjusts for new challenges and influences, it appears the property world may be experiencing a turning point. In fact, public perception and media coverage largely indicate that influences like recession concerns, political upheaval, rising energy costs, high inflation, higher mortgage costs and general market uncertainty could cause UK housing prices to slow to single digits before 2023.

Current market data however indicates that while demand is slowing as expected, interest remains resilient, particularly amongst investors. The property market has experienced two years of unprecedented growth thanks to the extended stamp duty holiday period and is now entering a phase of normality which means more sustainable, longer-term growth, something that could falsely display as decline.

If you’re in the market to purchase a home and are feeling uncertain about what this could mean we’ve compiled a breakdown of factors currently impacting the market.

Higher UK interest rates

The Bank of England has increased the base interest rate six times since December last year — most recently with a noticeable increase of 0.5 in the beginning of August, the biggest in 27 years. Predictions indicate that the base rate will rise above 3% by the end of 2022 and could be as high as 4.25% by August 2023. The decision makers on the Bank’s Monetary Policy Committee (MPC) will meet again on September 22nd to set new rates as their previously scheduled session was put on hold after the passing of Her Majesty the Queen.

The resulting fall out of these increases will likely have a knock on impact on mortgage costs and affect property purchases, specifically for those looking to enter the market for the first time.

Weaker Pound

It’s been a difficult period for the Pound as it recently suffered its sharpest monthly fall against the US dollar since the aftermath of the Brexit referendum when it hit a 37-year low. The weaker Pound exchange rate coupled with rising prices make it a daunting time to look at the property market as a local buyer but has caused a spike in foreign investment in UK property, proving that the market is still appealing for international buyers and investors. In fact, expats and those outside of the UK should consider now an ideal time to invest.

Rising UK inflation and energy prices

As the ongoing Ukrainian conflict affects industries and economies the world over, the UK property market has not been left unscathed. Oil and gas prices have experienced steep price hikes, causing rising inflation and ultimately affecting mortgage rates and potentially causing a recession.

Homeowners could face a £2,700 rise in their annual energy bills which has prompted newly elected Prime Minister Liz Truss to announce that a ‘typical’ household energy bill will be capped at £2,500 annually until 2024 in an effort to relieve pressure.

This is good news for Brits struggling to pay bills as energy costs for the typical British household are forecast to hit £4,420 a year by April next year, more than triple their level at the start of this year.

Property prices

Despite the above factors projecting that the market is cooling with property prices stabilising, data shows that the average property prices in London recently rose by 6.3% to a record £537,920 in the year to June. In fact, data from the Land Registry shows that London values went up by 1.9% in June alone, adding almost £10,000 to the average cost of a home in just a month. The lack of supply to meet demand, rising rental prices and currently appealing mortgage rate options are likely influencing property prices, which are projected to be even higher in a year’s time.

Buyer interest

While many factors influencing the market might make purchasing look unattractive right now, data indicates that buyer interest remains steady. According to Rightmove, the UK’s number one property platform, buyer activity on their platform is currently significantly higher than in the pre-pandemic market of 2019, and the market is predicted to hold steady.

Contact Tailor my Property

As the UK housing market and the Pound continue to shift there is a definite gap between the market’s current perception and reality. This does not however mean that now is not a good time to invest in a UK property. In fact, now might be an ideal time to act as opposed to waiting and experiencing the market cooling at a later stage. Tailor my Property has an extensive network of brokers, experts and analysts who can help you determine what the best moves are based on your individual situation and needs. Get in touch today to book a consultation.


bottom of page