Inevitable house price drop could cost cautious sellers thousands
The UK property market has seen a phenomenal recovery since the industry was effectively shut down during the first national lockdown in 2020, with demand and house prices running at unprecedented levels.
However, all good things come to an end and recent projections from the Office for Budget Responsibility have suggested that UK house prices will fall by -1% by Q4 2022.
The latest research from homebuying platform, Yes Homebuyers, has highlighted this potential drop in UK house prices over the coming year and analysed exactly what the pounds and pence impact will be for homeowners and sellers.
While a 1% drop may sound marginal, it could well be a best-case scenario for UK homeowners as the stamp duty holiday and furlough scheme both come to an end with the difference between selling today and selling this time next year bringing a significant hit to the wallet.
Yes Homebuyers has analysed the OBR data to calculate the impact that such a price drop would have on UK house prices and has discovered that delaying a house sale for a year or so could result in a loss of up to £5,000.
It comes as no surprise that the impact of a -1% price drop would hit hardest in London. If the OBR projection is correct, by Q4 2022, the average London house price will be £487,438; a loss of £4,924, or £615 every quarter.
In the South East, a -1% price drop would bring the average price down to £333,582, a loss of £3,370, while in the East of England, prices would drop by £3,026.
House values will decrease by more than £2,000 in the South West (£2,749), West Midlands (£2,119), and East Midlands (£2,080), while dropping by more than £1,500 in the North West (£1,801), Wales (£1,795), Yorkshire & Humber (£1,780), and Scotland (£1,636).
On a local authority level, it’s the boroughs of London that are going to see the most severe price drops. Nowhere will be hit harder than Kensington & Chelsea where the average house costs more than £1.3 million. A -1% price drop would, therefore, result in a loss of £13,210.
In the City of Westminster, prices would fall by £9,027, Camden would see an £8,058 fall, and prices in the City of London would decrease by £8,003. Elsewhere in London, namely Hammersmith & Fulham, Richmond-upon-Thames, Islington, Wandsworth, and Hackney, prices will fall by more than £5,000.
The only local authority area to feature in the top 10 and not be found in London is Elmbridge, a district of Surrey so close to the capital that it borders the aforementioned borough of Richmond.
Matthew Cooper, Founder & Managing Director of Yes Homebuyers, commented: “The housing market has enjoyed a real boom since early 2020. But, what goes up must come down, and house prices are no different. They are currently so inflated through high demand and lack of supply, that it would take a miracle for them to remain this high for any extended period of time.
“This means we’re facing an inevitable drop and those looking to sell their home would be wise to act quickly instead of waiting. With some house purchases taking up to 500 days to complete, it could even be that time has already run out to sell for a high price on the open market.
"If you want to sell your home quickly in current market conditions, a quick sale platform such as Yes Homebuyers could be your best bet of doing so. The only other option is to tough it out in the current market where sales are dragging on for an extremely long time and an impending house price drop could be far more considerable.”
SOURCE: Property Reporter