Disturbing new indicator for the UK economy. Demand for property purchases has fallen by 44% since the end of September. The publication of the mini-budget by the government of Liz Truss, who has since been replaced as Prime Minister, triggered panic in the markets. There are no more buyers.
First consequence of sky-high loan interest rates. They were above 6% in early October. In this context of high inflation, the British no longer invest in real estate.
Sales fell 28%, according to a property site. They are back at the level before the Covid-19 pandemic.
The measures announced by Liz Truss’s government have caused serious turbulence in the markets. The cancellation of this budget plan by Jeremy Hunt, the new Chancellor of the Exchequer, caused mortgage rates to fall slightly. They should be around 5% at the start of next year. But prices will definitely come down. The market cannot cope with this excessively weak demand in the long term.
However, buyers’ financing difficulties should not improve. 2 million households have taken out loans at variable interest rates. 3 million must renegotiate their loans. With the risk of no longer being able to follow the imposed rhythm.
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