House prices fall for first time since Covid

 House prices fell for the first time since Covid

Property experts are reporting the first fall in the price of buying a house in Scotland since the market was disrupted by Covid.Most chartered surveyors told their trade association that they had seen a drop in prices since April.

The Royal Institution of Chartered Surveyors (RICS) last reported such a decline in June 2020.Last week, Nationwide said UK house prices fell at their fastest pace in 14 years in July.Higher interest rates in recent months have made mortgages more expensive, while rising prices have hit people's spending power.

When RICS last reported a fall in prices three years ago, there was no exposure due to the pandemic and there was general economic uncertainty about jobs and incomes.In the three months to July, it said one in two parts of Britain had a more negative view of prices, while Northern Ireland had less of a negative reaction.

The survey found a sharp deterioration in the price outlook three months ahead and the number of transactions.As interest rates have risen steadily over the past 20 months, the number of potential buyers entering the Scottish housing market is falling, according to a clear majority of RICS surveyors.

More people reported a negative outlook than at any time since the middle of the last decade.Although this way of measuring market sentiment shows how opinion is changing, the numbers do not show how much prices or the number of transactions have fallen or are expected to fall.

The surveyors' commentary pointed to the increased cost of borrowing money for mortgages as the main cause of the market slowdown.Alan Kennedy of Shepherd surveyors in Fraserburgh said higher interest rates had "stifled market activity, although demand in some sectors still outstrips supply".

If demand exceeds supply, this can hold prices down or even push them up even as borrowing costs rise.Craig Henderson of Graham & Sibbald in Ayrshire said: “Ongoing inflationary pressures are causing buyers to think long and hard about every purchase decision.

"Prices are holding up in this area for now, but where they go later in the year will depend on borrowing costs and continued inflation. Caution is at the forefront of much of the market."Greg Davidson, of the same company in Perth, added: “There remains hesitancy in some sectors of the market due to increased costs, but the underlying market appears to be stable.

"There is still a shortage of supply in some key areas of the country house market and demand continues to outstrip supply."Simon Rubinsohn, RICS chief economist, said pressure on buyers was spreading to renters, who were also finding that supply was falling short of demand for rental properties.

He added: "Demand shows no signs of abating, supply remains tight and this means rents are likely to continue to rise sharply despite the cost of living crisis."The latest figures from Registers of Scotland for real transactions in Scotland show a 3.2% rise in prices in the year to May, taking the average house price to £193,000. Over the same period, UK house prices rose by 1.9%.

But another view of the market, published on Monday by Halifax, the biggest mortgage lender with its own house price index, showed Scottish prices fell by 0.7% over the past year, while UK prices fell by 2.4%.August last year was seen as a market peak after year-on-year price inflation rose above 12%. So the drop in prices now doesn't undo the surge that followed the pandemic.

The pent-up demand for homes after the market reopened reflected a desire for more space after the lockdown. And as more people work from home and no longer commute regularly, there has been a demand for homes further from cities.In the new build market, major homebuilders informed investors of a softening market with rising construction costs. Some limit plans to the number of homes they build.

Bellway said on Wednesday completions were expected to fall, with the rate of buyer bookings for new homes falling 28% to 156 a week this year.Meanwhile, Taylor Wimpey recently reported that it sold 5,120 flats and houses in the first half of this year, down a quarter on the same period last year, while profit margins fell by almost a third.

The average price for its sale rose by almost 7% on last year to £320,000.While those looking to get on the housing ladder will welcome the fall in prices, landlords and estate agents will be relieved to see mortgage rates fall, easing downward pressure on prices.

While there could be another rise in the Bank of England's base rate, money markets are falling during the fixed-rate mortgage era, which is reflected in the longer-term rates at which lenders fund their products.On Wednesday, Halifax - the largest mortgage lender, part of Lloyds Banking Group and supplier of mortgage products to the Bank of Scotland - joined several other major lenders in cutting rates.

In a surprising turn of events, the real estate market has just experienced the first drop in property prices since the outbreak of the Covid-19 pandemic. This significant shift has potential homebuyers and investors pondering the implications and opportunities in this changing environment. In this article, we delve into the reasons for this decline, the factors influencing the market, and how potential buyers can make the most of this unique moment.Home prices fall, first time since Covid, real estate market, potential home buyers, investors, changing environment

The impact of the pandemic

The Covid-19 pandemic has had a profound impact on various sectors of the economy, including the housing market. Initially, the housing market experienced a surge as people sought larger homes and suburban properties due to telecommuting trends. However, as the pandemic continued, uncertainties emerged that led to a market slowdown. Now, for the first time since the start of the pandemic, property prices are falling. Covid-19 pandemic, housing market, telecommuting trends, slowdown, falling real estate prices

Factors leading to decline

Several factors have contributed to the recent decline in property prices. One of the primary factors is the adjustment phase after the initial wave caused by the pandemic. As the market stabilizes, prices naturally undergo a correction. In addition, rising interest rates and concerns about the economic recovery played a role in this decline.adjustment phase, pandemic surge, market stabilization, rising interest rates, economic recovery, falling property prices

Opportunities for home buyers

While the decline in property prices may seem alarming, it presents unique opportunities for potential home and condo buyers. Lower prices mean better affordability and allow individuals and families to consider properties that may have been unaffordable during the peak of the market. It is essential to work with experienced real estate agents who can navigate this changing market and identify properties that fit your budget and preferences. lower prices, availability, potential home buyers, experienced real estate agents, changing market, real estate

Considerations for Investors

Real estate investors can also benefit from this shift in the market. As prices adjust, strategic investors can identify properties with long-term potential. Whether for rental income or future sales, careful analysis of market trends and property value can lead to lucrative investments. However, it is essential to conduct thorough research and seek professional advice before making any investment decision. real estate investors, market trends, property value, rental income, lucrative investments, professional advice

The recent decline in property prices, the first since the Covid-19 pandemic, has created a dynamic environment in the property market. Buyers and investors alike should approach this change with cautious optimism. This is an excellent time for potential buyers to enter the market and for investors to identify properties with solid potential. Staying informed, working with experienced professionals and doing thorough research are the keys to making the most of this changing real estate landscape. falling home prices, cautious  dynamic environment, home buyers, investors, changing real estate landscape.