Difficult times
The UK has been going through some difficult times recently. Where once petrol and home heating costs were easier to manage and pandemics only really happened in movies, it’s not like that anymore. The Pandemic, furlough, the property boom and Russia’s invasion of Ukraine, and the politicians themselves have all had a meaningful impact on the UK economy.
The cost of living crisis explained
It’s a term that is used a lot in the media today but what does the cost of living crisis actually mean? It means that the cost of living including energy, mortgages, food and products are all going up but wages aren’t rising to meet that cost. In short it means that people are finding it more and more difficult to pay for the basic amenities of life.
The Covid Pandemic in 2020 caused the biggest health, economic and production crisis in recent memory. We were all required to put our lives on pause and stay home to avoid the virus. This caused a lot of financial problems for companies and individuals and if the UK governments furlough scheme had not been introduced it would have been even worse.
As the world recovered from Covid it sent gas demand up significantly which caused prices to rise. The rise in energy prices has fuelled inflation of lots of other products as production of most products are dependent on cost effective fuel and energy.
What effect will the cost of living crisis have on the property market?
You never know for sure with the property market. It has frequently defied expectations. At present though the property boom that originated after the first Covid lockdown could be coming to an end.
The rate of house price increases reduced in August 2022 compared to the previous year. House prices increased by 13.6% compared to 2021 when the rate of increase was 16%. There’s a good chance that when the next official figures are released that this will have reduced further. Inflations effect on the economy has made a lot of workers in the UK engage in strike action to try and achieve pay rises. With the costs already having gone up for household heating and fuel it’s inevitable that this will feed into less money available to put into savings for some people. House prices rising will have already caused many house buyers to stretch their finances to afford the house they were after. The current economy could mean there are less people willing to pay more to secure a house.
The mini budget and interest rates
The UK economy in October 2022 wasn’t looking in the healthiest of states, but in September 2022 it looked even worse. The governments’ mini budget sent markets tumbling and caused the Bank of England to raise interest rates. This meant an increase in interest rates with mortgage customers not on fixed rates being exposed to much higher monthly payments. The rise in interest rates caused mortgage providers to temporarily suspend many of their products as the financial markets were just too volatile.
Zoopla recorded a drop of 44% in house buyer demand after the effects of the mini budget. The mortgage market has stabilised since but with higher interest rates.
How can we help?
As one of Scotland’s top property buyers we are always looking for property to purchase. We have bought 100s of properties all over Scotland and we would be happy to provide you with a free house valuation and an offer to buy your property.
