Home Estate Planning UK and London house prices drop again but ‘affordability still a huge barrier’

UK and London house prices drop again but ‘affordability still a huge barrier’

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House prices fell in December with the average price of a property now costing £285k – but it’s still hard to afford a home for lots of Britons.

The figure, according to a new government release, is down £4,000 when compared to the exact same period the year before, but up from 2.3 per cent on November’s reading. 

In London, house prices remained the most expensive of any region in the UK, with an average price of £508k at the end of last year. Average house prices decreased by 4.8 per cent year-on-year in the capital. 

Gareth Lewis, managing director of property lender MT Finance, said: ’”These are the figures we were expecting, with a flat market and decrease in transactions resulting in softening values. 

“Since then we have seen more consumer confidence, which has meant agents are busier, people are looking to transact and having conversations about buying and moving.

He added: “As the next set of data comes through, we should see transactional volumes improve and values edge up as ultimately there is more demand. 

“What we don’t want to see is values go too high or too fast – the market needs a period of relative calm so that buyers and sellers can get back to transacting property in a measured way.”

Falling mortgage rates have improved sentiment in the housing market. 

Rates have declined, in response to cooling inflation, but remain around three per cent higher than their December 2021 average of 2.34 per cent. 

Arjan Verbeek, chief of Perenna said: “House prices continuing to fall may be a welcome sign for those hoping to buy, but affordability still remains a huge barrier.

“The number of first-time buyers is at a 10-year low* and there’s still no light at the end of the tunnel for aspiring homeowners.”

“The UK mortgage market is flawed. House prices remain much higher than the average salary, despite today’s decrease, and even if prices continue to fall, lenders are still limiting consumers’ borrowing power.  We need structural reform to rebuild the foundations for a housing market that is truly affordable and accessible.

He added: One solution is increasing the availability of flexible long-term fixes which allows consumers to borrow up to 30 per cent more than high street lenders.”

“It’s now more important than ever to open the market up to alternative products and give everyone a chance to own a home. The housing market needs a breath of fresh air.”

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