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UK property market in the deep freeze

UK property market in the deep freeze

Date: 24 October 2023 | By: cosgrove

Thanks to the steep rise in interest rates, UK house prices are falling putting the UK property market in the deep freeze. In the year to the end of September, they fell an average of 5.3%. This reduced the price of an average UK home by almost £14,500 to £257,808.

Despite price falls in every UK region, mortgage approvals are at record lows due to falling affordability. This has put huge pressure on the UK rental market where rising interest rates and a shortage of supply have pushed rental costs to new all-time highs.

What does this mean for investors?

The latest figures from Nationwide suggest that UK mortgage approvals are now 30% below their pre-pandemic levels. This reflects the fall in affordability delivered by today’s high interest rates.

According to Nationwide, “…someone earning an average income and purchasing the typical first-time buyer home with a 20% deposit would spend 38% of their take home pay on their monthly mortgage payment”. This compares to the long-run average in the UK which is 29%.

The UK’s high interest rates have also pushed up rents, both through landlords passing this cost on to their tenants, and by creating record levels of demand for rental properties. The resulting shortage of rental properties has seen average UK rental costs jump by 10% over the last year to their highest on record.

UK property market in the deep freeze?

Key takeaways

  • UK house prices continue to fall with the biggest decline in the south-west of England.
  • UK rents are at record highs with the average rent outside of London now at £1,278 a month.
  • Numerous UK cities have seen annual rent increases of more than 20%

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source: Quilter, Between the Lines October 2023


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