If youâve been watching the UK property market, you might feel like things donât quite add up at the moment. June brought the sharpest drop in house prices weâve seen in over two years, yet rents are still heading upwards.
Earlier this month, I wrote about how UK rents are climbing again as more tenants compete for fewer homes. Now, looking at the latest house price data, you can really see how these stories fit together. Whatâs behind these shifts? And what does it mean if you want to buy, invest, or just keep your home secure?
đˇď¸ Why are house prices falling?
Letâs start with the headlines. According to Nationwide and other major indices, UK house prices fell by about 0.8 percent in June. That brings annual growth into negative numbers. There are a few reasons for this.
- Stamp duty changes have pushed up costs, especially for buyers looking at more expensive homes.
- Mortgage rates are still high, which means lots of buyers are waiting on the sidelines and hoping for a better deal.
- Thereâs also a general feeling of uncertainty. Delays in big projects, a cautious job market, and more talk about interest rate rises are making people think twice.
- Finally, many sellers still hope to get the prices they saw during the pandemic. Properties are sitting on the market for longer and sellers are having to reduce their expectations.
(If only you could use time travel to buy in 2021, right?)
đ Why are rents still rising?
On the other hand, if youâre renting, youâve probably noticed that costs havenât come down at all. Rents across much of the UK are still increasing, and competition for good homes is tough.
- More people are renting and fewer are buying. With mortgages harder to get, demand for rental homes is way up.
- Landlords are also dealing with higher costs themselves, from bigger mortgage payments to new rules on property standards. Many are passing some of these costs on to tenants.
- And there simply arenât enough rental homes to go around, especially in cities and popular commuter towns.
(Rent bidding wars: not as fun as they sound.)
đ What does this mean for buyers?
If youâre looking to buy, the next few months might offer a real window of opportunity. Sellers are generally more open to offers below the asking price, particularly if their property has been on the market for a while.
My advice: Get your mortgage in principle sorted and keep a close eye on your local area. You might be able to land a good deal if youâre ready to move. If interest rates start to come down or confidence picks up, things could move quickly in the other direction.
(Basically: be the early bird and watch for those worms.)
đź What about landlords and investors?
There are pros and cons here. On the one hand, lower prices mean you can pick up properties at a better rate, especially in areas where rents are strongest. But remember, the costs of owning and managing rental properties are also up, from financing to compliance. Be sure youâre clear on your numbers and consider things like energy efficiency, location, and tenant demand.
There are also new rules on the horizon for both tenantsâ rights and energy standards, so factor those into your plans.
đĄ And tenants?
If youâre renting, expect a busy and competitive market. Good places go quickly and landlords can usually take their pick. Make sure your paperwork and references are ready to go so you can act fast if you find somewhere you like. And with new protections coming in for renters, donât be afraid to ask questions or try to negotiate.
(Get your ârenterâs CVâ readyâyes, itâs a thing now!)
⨠Final thoughts
The UK property market is always full of surprises. Right now, falling house prices and rising rents are creating a situation thatâs tricky in some ways but also opens up new chances for those who are prepared. Whether youâre buying, investing, or renting, the most important thing is to stay informed and be ready to act when the moment feels right.
Got thoughts or questions about the market? Iâd love to hear from you. Drop a comment or get in touch.