Mortgage lender Halifax announced last month that UK house prices fell at the fastest rate in 12 years. Housing prices fell 2.6% year-on-year in June, according to Halifax.
Company executive Kim Kinnaird stated that the record decline occurred when compared to the housing prices recorded in the same period of last year, and that prices have been stagnant in the last few months. Kinnaird claimed that the downward movement would continue if the Bank of England continued to raise interest rates. BoE implements tight monetary policy to solve the ongoing inflation problem in the country.
The Halifax executive made the following statement after the housing index data:
Kim Kinnaird
“It is difficult to predict how deep or permanent the decline in housing prices will be. Falling inflation may provide some support to the industry. Markets agree that the rate will reach 6.5% in December.”
Mortgage experts are worried about the housing market due to rising loan costs if interest rates remain high.
Past experience shows that large increases in interest rates lead to decreases in house prices. According to Halifax, the fall in house prices had the biggest impact in the southeast of England. In London, prices fell 2.6% year-on-year, the biggest decline since October 2009.
Will Housing Prices Decrease in Turkey?
The different economic policies implemented in our country until recently had a significant impact on housing prices. Investors who wanted to maintain their existence due to low interest and high inflation showed great interest in the housing.
Although the official data released in April shows that house prices continue to rise, this situation may change in the coming days. The administration of Treasury and Finance Minister Mehmet Şimşek, Vice President Cevdet Yılmaz and CBRT President Hafize Gaye Erkan, who took office after the May 2023 elections, signal that they will follow a policy closer to the mainstream.
Choosing the fight against inflation as the main theme of the upcoming period, the new economy management took action to meet the medium-term 5% target. In the last MPC meeting, the Central Bank increased interest rates to 15% for the first time in months.
The increased cost of housing loans with high interest rates can greatly reduce demand. In such a scenario, although house prices do not decrease numerically, the housing investor may lose in real terms compared to foreign currency and interest rates.
economic staff “strict policy” Despite the emphasis on wages, the generous hikes in wages confuse the experts on the fight against inflation.
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