Softer pricing is unsurprising as higher interest rates have a much larger impact on affordability than asking prices. 2022 pricing levels, which were buoyed up artificially by policies such as Stamp Duty Land Tax reductions and very low interest rates, are no longer achievable.

However, unlike commercial property such as offices, which in many cases have fallen in value by 20-30%, it’s unlikely that we experience a full house price crash. Firstly, this is due to the ‘necessity’ of housing. We all need a roof over our heads. Secondly, a large proportion of the market, 8.8 million (36%) homes in England, are owned outright, and they are unaffected by mortgage interest rates. For this reason, fears of a ‘house price crash’ are unrealistic.

The challenge is less around house prices and more around the shortage of rental homes, which are in ever greater demand due to reduced affordability of buying a home. The relative stability of house prices combined with a growing supply shortage in rental is encouraging new institutional investment, and this is essential for ‘Generation Rent’.

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