Home prices are falling: what to do next, whether to buy or sell?

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The much-discussed home price crash after Covid-19 may have finally arrived, UK home prices falling annually for the first time in eight years, as new figures released by Nationwide confirm. .In the midst of severe mortgage restrictions and a tight supply of homes for sale and rent, what does this moment mean for the UK property market? The truth is that we just don’t know, partly because the drop in house prices so far is slight – 0.1%. However, it starts to seem more important if we look at where the housing market was only last month, with annual growth of 1.8%.

Homeowners will want to know if they should not sell their property after the prospect of further price cuts. Prospective buyers will want to know if they should sit back and wait for even lower house prices a few months later.

Although a further slowdown seems likely given the latest figures, quarterly data still points to house price growth, with London performing the best with an average of 2.1%, moving slightly closer to house price levels in 2017. Nationally, the current data is not surprising, “given the magnitude of the economic shock from the pandemic.” Robert Gardner, Nationwide chief economist, said:

” [T]he medium-term outlook for the housing market remains very uncertain. Much will depend on the performance of the economy as a whole, which in turn will be determined by the evolution of the pandemic and activity restrictions (including any change in behavior). ”

In other words, a further decline in the housing market is by no means a guarantee and, above all, Degree housing prices will continue to drop most important, not the fact that real estate prices fall per se. No one expects house prices to rise massively over the next six months – any prognosis for growth will be very modest. But this conservative estimate also applies to the fall in house prices.

Our advice to current and potential owners is to take the recent numbers with a pinch of salt. Yes, the first annual decline in house prices in eight years is significant, but it hasn’t been huge. In practice, a fall of 0.1% is unlikely to significantly affect buyers or sellers, although the message it sends about the risk of an accident will undoubtedly further reduce the supply of homes for sale (and for rent), which in turn should continue to support house prices over the next few months.

So, will we see the 10% drop in house prices that was widely discussed as a possibility in March? Probably not. Will buyers have to compete for an ever-decreasing number of homes for sale while still having difficulty obtaining a mortgage? Probably yes. We discourage potential homeowners from suspending their purchases if they are able to do so, as they will have less choice of properties by the end of the year.

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