Anna Williamson has been hunting for a flat in London since January. In that time, average rates for new mortgages have jumped multiple times, each limiting the pool of what she can buy. Grace and Howard are anxiously waiting to see how much further the cost of borrowing will have risen by September, when they have to renegotiate the mortgage on a flat they bought last year. Mary is hoping to complete her purchase as soon as possible, after bringing forward her decision to buy in the hope of beating ever-rising costs.
Talk to people on the ground and it’s quickly apparent that England’s housing market is in a state of flux. The Bank of England has increased the base interest rate half a dozen times since December last year — most recently by 0.5 percentage points in early August, the biggest single increase in 27 years — as it tries to stem spiralling inflation. Homebuyers are scrambling to respond to rising costs: some are accelerating moves, others are abandoning them.
The result, analysts say, is that the UK housing market may be at a turning point, ending a near decade-long cycle of rising prices. “We’re certainly entering a different period,” says Noble Francis, economics director of the Construction Products Association. “Interest rates are not going to go back down to 0.25 per cent, let alone 0.1 per cent: we’re going to have to get used to higher rates.”