Home sales in the UK will begin to rebound in the first quarter of 2024 after having “fallen off a cliff” this year, predicts independent financial advisory, asset management and fintech organisation, deVere Group.
The assessment from the organisation’s investment director, James Green, comes as UK property sales and, in turn, prices continue to fall.
He said: “UK home sales have fallen off a cliff this year with stubbornly high mortgage rates having had a stranglehold on the housing market as the Bank of England has been raising interest rates at a clip to try and bring down red-hot inflation.
“Inflation peaked at 11.1% last October and has since eased to 6.8% in July – but this is still more than three times the Bank’s 2% target.
“As such, UK interest rates will peak at 5.5% next month, which will further weaken demand in the housing market.”
Green continued: “However, towards the end of the year, we expect that the Bank of England, concerned about the impact of higher borrowing costs on the economy and to avoid a prolonged recession, will move to slow the interest rate increments.
“We believe that this would unleash some of the pent-up demand, and home sales in the UK will begin to rebound in quarter 1 of next year.”
deVere’s property investment division believes that as rates begin to fall, there will be some “decent property investment opportunities” in the UK that investors “will be keen to seize”.
After MIRAS (1988) it took till spring 1989 before the effects were noticed and then only in autumn were they really beginning to bite, it wasn’t until spring 1994 did enough confidence return for things to be classed as normal.
When Fannie Mae rocked the world transaction prices took a hit for under 12 months but transaction volumes took 3 or 4 years before things were normal again
I’m not sure who Mr. Green is or what he believes he can see but he doesn’t seem to have factored in that we are just beginning the run up to a general election where it’s unlikely the economic policy makers and the economic policies that determine the housing market will remain as they are now.
Retaining low interest rate economic beyond April 2014 created a false, ‘feel good’ economic policy that meant a lot of homes that ordinarily would have been sold were retained either for AST and then more recently short let accommodation. If Mr. Green thinks interest rates won’t be used as a means to control inflation and policy makers won’t do something about the number of homes being used 2 or 3 nights a weeks for leisure rather than homes, and everything is going to settle down before there’s an election there’s a chance it’s all going to be tickety boo.
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Spot on, prices are dented but its the volumes (or lack of them) that worry me too. I – and my bank manager – hope Mr Green (above) is right but I have seen plenty of slumps where demand remains pent up for much longer than a year.
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Fallen off a cliff? I don’t think so. Prices are pretty much the same where I live against a year ago. Fallen off a cliff suggests double digit declines or more. I’m not sure this guy knows what he is talking about. Early 2024 for a rebound sounds too early as well.
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Go and look at the actual numbers of transaction achieved since the last SDLT holiday and then compare the pattern seen in 88/89/90 and again in 07/08/09
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