A booming property market has graced Britain since the end of the first COVID-19 lockdown in 2020. Stamp Duty holidays, socio-economic factors and low-interest rates have resulted in a feverish desire for Brits to move home – but all good things must come to an end – and experts are on the fence about whether rising interest rates could cause the market to take a downturn.
House prices have reached a record high as a result of the boom, with the average property value reaching more than £250,000 for the first time in UK history this autumn.
Prices have increased by 9.9 percent in the past year and by more than £30,000 since the pandemic began – an unprecedented boom given the market was effectively shut down in the first lockdown.
And the market has reported on of its busiest ever year, too – Zoopla’s estimates show that there will be 1.5 million sales this year, with the total value of homes changing hands at £473 billion; some £95 billion higher than in 2020.
Predicting what will happen in the next year is tricky given the multiple factors at play in the market currently.
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“Whilst inflation continues to soar, and many experts predicting the inevitable rate rise to come sooner rather than later, fortunately the continuing rate war between banks will keep interest rates low and thus the demand for housing should remain as strong as ever.”
The predictors for a market crash aren’t currently in place – but the rise in inflation, predicted by some to rise to as much as five percent, could start a chain of events that would cause the market to dip.
Lewis Shaw, Founder & Mortgage Expert at Shaw Financial Services, told Express.co.uk: “A crash is predicted by several factors coming together at the same time; rising inflation that leads to increased borrowing costs as central banks try to regulate the economy, over-inflated asset prices artificially pumped up by perhaps a tax break and low borrowing costs, rising unemployment and a contraction of the economy, brought on by supply chain issues, but mainly an inability to get credit.
“We can still get credit. So, as things stand, we’re OK.
“However, if you are concerned about the possibility of a housing crash, it’s maybe best to elect a Government that acts in its citizen’s interests rather than its internal failings.”
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