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  • Writer's pictureEdgar Rayo

Finanze® Daily Digest - 02/11/2022



The Brief: The housing market is set for a correction instead of a crash, according to JLL. The group forecasts a 6% drop in property values next year owing to the high cost of living, inflationary pressure and an anticipated recession.


Why It Matters: Other groups predict a deeper dive of housing prices compared to JLL. Credit Suisse expects a fall between -10% to -15%, while Capital Economics issued a -12% estimated drop by 2024. Nationwide states that the average price of a property has sunk to £268,282 from £272,259.


Finanze® Foresights: Headlines that state a looming housing market crash make news reports more engaging. But JLL is a bit conservative with its estimates since we’re still seeing signs of a correction (which is technically a 10% drop below peak value). This does not mean that the UK property market is not vulnerable anymore to an imminent crash in values. Mortgage rates have already reached 6%, more than double since December 2021. In case a housing crash eventually transpires, we can expect a buyer’s market but only for those with enough cash to offer sellers. This is because first-time buyers face borrowing costs that remain high and will most likely be priced out of the market anyway. But as we head into a correction for now, we expect sellers to hold off plans of putting their homes in a cooling market, while housing associations are at a losing end when they gamble on the open market.

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The topics covered in articles are complex and do not substitute the need for financial, legal, accounting, tax and other advice before making any decisions or taking any action based on information in articles.

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