House prices: Expert discusses 'interesting' pricing differences
Homeowners and buyers have enjoyed historically low-interest rates and a huge boom in the value of their homes over the past two years. But this could all come crashing down as the UK’s economy is forecast to drop into recession later this year or early in 2023.
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The UK’s economy is in turmoil, with inflation predicted to reach 13 percent in late 2022, spending power eroded and house prices already falling, albeit only by 0.1 percent in July.
But despite only a modest drop so far, Gary Hemming from ABC Finance has explained that historic house price data shows a tumble in home values could be about to happen.
He told Express.co.uk: “If we were to see the same drop as previous recessions, we could see homeowners losing significant amounts of money over the next 12 months."
During earlier recessions, even when adjusted for inflation, house prices were far lower than they are now.
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The market largely consisted of people who wanted to buy and sell their home, with far fewer private landlords buying up property and driving prices upwards.
As such, a recession would see less of a swing in demand, as a home was often for life, with less regard for turning it into a profitable investment.
Mr Hemming said: “This allowed property prices to remain fairly strong, even in spite of a nasty recession, which was a great sign for property owners.
“That said, the property market has changed significantly in recent years, with property now seen as an investment and supply and demand becoming a bigger factor to prices, meaning that since 1989 the picture is sadly, a little bleaker.”
Property prices fell significantly during the recessions of 1990 and 2008 - and it’s likely we will see a similar drop in the upcoming recession.