The direction of the UK housing market has been the subject of much speculation, among various slightly conflicting projections. But it appears the price trajectory is now downward, especially for those seeking property for sale in Cheam.
While the economy has avoided the recession many (including the Bank of England) predicted last year, growth remains low, inflation stubbornly high, and interest rates have just been raised again, pushing mortgages up.
According to Zoopla, the upshot of all this is that its previous prediction, of a five per cent drop in prices over the course of the year, is now on course to be correct.
The website’s June House Price Index put the latest year-on-year average for the UK 1.2 per cent up on 12 months ago, but that is a decline from the 1.9 per cent in the year to May and the trend looks set to turn negative soon.
Indeed, the pinch is already being felt most in regions, towns and cities with the highest prices, a trend likely to continue with London and the south-east set to see larger falls. The capital has already reached the point of decline, with prices down 0.2 per cent year-on-year.
That means house hunters in places like Cheam are more likely than those living in some regions of the country to find lower prices this summer and also to see greater falls than those living in regions like the north of England.
Lower prices may help to counterbalance higher mortgage rates, not least as those who can afford them may find that if they take out a deal that tracks the base rate, they will benefit in months to come from rate cuts as consumer price inflation finally eases.
When exactly that may be is anyone’s guess, of course. In its latest minutes after raising the base rate to five per cent, the Bank of England’s Monetary Policy Committee said (paragraph 47) that it would be willing to raise the rate again if needed.
However, the vote was not unanimous, with two of the nine members arguing against any rate rise at all. Their view may become more prominent in the months ahead.