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House price crash: Homes to be empty ‘for very long time’ as recession hits – new forecast
HOUSES will sit empty “for a very long time” in the event of a market crash, as developers are more likely to want to see a return on their investment than shift properties for a loss, an expert has said.
11:00, Sun, Aug 28, 2022 | UPDATED: 15:20, Sun, Aug 28, 2022
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Nikodem Szumilo, Professor in economics of the built environment at UCL, said the decisive factor in an “abrupt correction” in house prices would be the refinancing of mortgage payments, which are expected to become increasingly unaffordable. As such, prospective buyers looking to get more value for their money through a crash in prices may not want to hold their breath.
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At the start of the month, the Bank of England raised its base interest rate to 1.75 percent – the sixth consecutive rise since dropping it to a record low of 0.1 percent during the pandemic. Economists are anticipating this will be raised by a further 0.5 percent in September.
The interest rate rises are an attempt to stem spiralling inflation – which climbed to over 10 percent in July, and could reach above 18 percent by January – putting immense pressure on the cost of living, but are also likely to send mortgage interests higher.
House prices in the UK have grown 60 percent in the past decade, and so as the cost of living crisis puts pressure on family finances, experts are predicting a dramatic downturn may be on the cards soon.
Dr Szumilo explained that the crunch point would be when it came to new buyers refinancing their mortgages on the stark economic backdrop.
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