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An article published in mid-August by the BBC carried the celebratory claim that house prices had fallen for the first time in 2022. This development might seem a little odd, however, given that the usual influences on house prices seem to favour more increases. In other words, it’s unlikely to be more than a fleeting change, meaning that this winter might still be a tough one for buyers and sellers.
Source: Pexels.
What are those influences, though? Firstly, economic factors like the rate of inflation are one of the biggest causes of house price rises. However, the current slump in property values has more to do with supply and demand. During the summer, from July to August, UK prices fell by 1.3% to an average of £365,173. What might seem surprising is the fact that this drop has been two years in the making.
Mortgage in Principle
Since 2020, the housing market has been subjected to all kinds of alien influences, which have changed how and why people buy and sell property. However, the prices seen in August are actually much closer to a ten-year average, meaning that the economic maelstrom that has been causing values to surge may have started to abate, albeit temporarily. There’s still likely to be a 7% increase year-on-year though.
Unfortunately, that’s not the whole story. An expected increase in interest rates hasn’t had the chance to hit house prices yet so potential buyers should make every effort to lock in deals at the earliest instance. Fortunately, this doesn’t mean doing anything reckless. Getting a mortgage in principle can expedite the house-buying process and help prevent sales from falling through.
Source: Pexels.
The mortgage broker Trussle defines a mortgage in principle as a document that outlines how much somebody can afford to borrow. It’s by no means legally binding but it does serve as some assurance that the buyer is serious about purchasing a house. Of course, to actually receive a mortgage, the applicant must still go through the standard approval process, including credit checks and other suitability tests.
An Exclusive Club
The obvious question to ask is how does the housing market shape up in the Glasgow area? One source puts the average house price in Renfrew at £137,763, which is 9% higher than in 2021 but still a little bit (2%) lower than 2017’s high. Glasgow itself averages £207,384. These figures vary according to the criteria used but the speed at which prices have gone up has made estimates particularly challenging.
On average, Scotland’s houses go for £207,000, according to figures from the gov.scot website, with the highest prices attached to places in the capital Edinburgh. While sale prices tend to be lower for first-time buyers, it’d be easy to believe that home ownership is becoming an exclusive club. Census data reports that 62% of Scots own the house they live in though, which is an encouraging figure for future movers.
Overall, the property ladder is likely to be a little less wobbly going forward but an occasional bit of strife is still anticipated.