November 11, 2022
Throughout the Covid-19 pandemic, Brits across the country hoped that post-pandemic life would resume an element of normality. Perhaps there was a sense of hopefulness that the potential inflation regarding the cost of living would settle down, and that those who had faced hardships throughout the pandemic would be able to get back on their feet and recover from any losses. Yet since last year, the UK has experienced more financial adversity than life previously.
In 2021, the UK housing market seemed to be on a booming trajectory. Statistics gathered by financial experts Money Week stated that throughout 2021, property sales across the UK were the highest they have been since 2007. The price of properties rose by almost double-digit rates. Market consumers were keen to get back on the property ladder after having to isolate during lockdown.
At the start of 2022, experts predicted that during this year, the UK property market would continue on and go further in a positive direction. At the beginning of the year, the UK government announced that there was set to be a rise in inflation.
Increasing by 5.5%, this is the highest inflation rise ever to be recorded in the National Statistic series. It has had dramatic consequences for homeowners and those looking to get on the property market.
Is housing still affordable now that the cost of living has risen?
In February 2022, the average cost of a property in the UK rose by a significant 1.4%.Which made house prices hit an astronomical high of £282,800.
According to property experts at Halifax, this is an 11% increase in house prices. Reiterating the staggering statistic that properties in the UK haven’t been this expensive since the financial crisis of 2007. And as the UK has a burgeoning crisis regarding the cost of living. How is the average person expected to afford a house with the rise in the cost of living? As every penny individuals are earning is eating into their disposable income, and alongside stagnant wages, it is making it more difficult for people to save for a mortgage deposit while living a somewhat ‘normal’ life.
A large majority of experts believe that the rise in the cost of living will not impact the UK housing market. Those who are going to be impacted are those who are already struggling financially. Although the rising cost of living will inevitably cut into everyone’s disposable income. It will only be temporary. The cost of living will come down, or wages across the country will rise in line with inflation. Additionally, individuals who have access to savings will be able to bank on these further down the line. Overall, it seems as though the rising cost of living won’t have a dramatic impact on the UK housing market. Mortgage costs have stayed pretty much stagnant, and the only thing to potentially alter is the cost of credit.
Currently, mortgage lenders are willing to lend money for significantly longer periods of time and offer more flexibility for borrowers. This means that ultimately, the housing market is going to continue to function. You shouldn’t waste time trying to judge the ‘perfect’ time to make a move. Potentially you should wait until this financial hurricane blows over.