The Brief: UK asking house prices fell by 1.1%, according to Rightmove, this seasonal adjustment is a result of more sellers wanting to close transactions before Christmas. It added that the total of unsold properties with reduced prices rose 8% in October, more than double compared to last year’s level.
Why It Matters: Although seasonal factors come into play during the last quarter of every year according to Rightmove, the rising cost of mortgage and buyer affordability have also caused homebuyer demand to fall -26% in November. The trend is in line with The Royal Institution of Chartered Surveyors’ New Buyer Inquiries Index that fell -55% last month, which is the lowest reading since the 2008 financial crisis.
Finanze Foresights: UK chancellor Jeremy Hunt announced on Sunday that everyone will be paying more tax to fill a hole in public finances. We expect prospective house buyers, especially first time buyers, to feel the pressure of raising a deposit. Estimates indicate that a 20% deposit is now worth more or less 120% of an average employee’s pre-tax income. With higher mortgage rates and new taxes coming, affordability will be more stretched, exerting immense influence on buyer activity as more are held back from home ownership and are expected to wait until next year before jumping back into the buying scene.
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