Unravelling the UK property market: Assessing the direction of house prices

It can be hard to know when the best time to sell or buy is, especially as the UK housing market is constantly changing. In December 2022 the average UK property price was £294,329 whereas in July 2023 it was slightly lower at £290,000. This indicates just how much the market can change in 7 months.

Understanding the current landscape

At present, the UK housing market looks very similar to the time preceding the pandemic. A cut in stamp duty as well as inflation and higher mortgage rates led to an unstable market for a couple of years.

Although the economy has levelled out, mortgage interest rates are still on the higher side, the market is considered to be fairly stable.

Impact of economic conditions on properties

Generally speaking, there are several factors that can influence property market rates. Interest rates are one of the most common influences. Simply put, if interest rates on mortgages are higher, potential buyers might be put off and opt to wait before purchasing a new property. This could lead to more houses on the market than there are buyers, potentially driving prices down in a bid to get the houses sold.

Employment rates also have the same effect. If more people are out of work, the amount of potential house buyers decreases. On the opposite side, if more people are in work then the pool of house buyers increases. This depends on when people can afford to borrow for a mortgage, as unemployed people are deemed more of a risk by lenders and are less likely to qualify for a mortgage.

There are alternative options for would-be homeowners. If you own a house already you could borrow against the equity of your house. Use an equity release calculator to see how much you could free up from your home.

Regional variances: A spotlight on diverse property markets

It is important to acknowledge the regional differences in the UK housing market. The northern part of the country tends to have lower house prices when compared to southern areas. The average price of a house in the south is sitting at around £404,800 whereas the same in the north is £209,400.

This gap is narrowing, though, as businesses look to put investment in the northern cities. This could increase northern house prices as businesspeople flock up the country for new and exciting job opportunities.

The same can be said for rural vs urban properties. Urban properties tend to be more expensive and offer less space for the price. City living does have its perks, such as convenience for pretty much everything, the social aspect and ease of travel. Rural living offers more space, peace and quiet, and better value for money.