House prices in Tunbridge wells may soon stop soaring after a prominent estate agent predicted an 11% drop in local home values by the end of 2019.
Savills made its forecasts after the Bank of England (BoE) implemented the highest increase in interest rates in a generation, increasing mortgage payments for millions.
UK base interest rate increased by 0.75 percentage points on Thursday, November 3; this is the most significant increase in the rate since 1989.
The Bank of England estimates that this will result in an annual increase of roughly £3,000 in mortgage payments for families due to renewing fixed-rate and tracker mortgages. A year and a half ago, the benchmark interest rate was just 0.1%.
According to Savills, house values will fall as interest rates rise and the housing market becomes more volatile.
Savills forecast the average property value in England and Wales to drop by at least 10% in 2023.
According to the Times, Tunbridge Wells now has the highest home prices in Kent, surpassing Sevenoaks last year.
As reported last month, property prices in the borough have increased by an average of £38,000 in the last year, but this trend seems to be reversing.
Savills forecasts an 11% decline in value for properties in London and the South East of England by the end of 2019.
Rightmove estimates the average home price in Tunbridge Wells as £510,588, while Zoopla puts it at £518,385.
Assuming Savills’ forecast holds, the typical Tunbridge Wells property may lose as much as £57,000 in value, bringing the price down to around £460,000.
However, Savills predicts that the South East would see a price recovery “from 2027 onwards,” notwithstanding the recent decline.
“A new Prime Minister and fiscal policy U-turns appear to have reduced some of the pressure on interest rates,” said Lucian Cook, head of residential research at Savills. “but affordability will still come under real pressure as the effect of higher interest rates feeds into buyers’ budgets,” he added.
“That, along with the severe cost-of-living constraints, means we anticipate to see prices decline by as much as 10 percent next year amid a time of much lower housing market activity,” the author writes.
Tunbridge Wells real estate brokers are optimistic about the market but warn that certain homes may be overpriced.
“When a market stabilizes, some individuals who have over-valued their houses may not be able to be as ‘punchy’ with their figures,” Shaun Kidd, director (and co-founder) of Jack Charles Estate Agents, told the Times.
Because there was never any actual profit, to begin with, any loss incurred upon selling is only paper.
If we speak about Tunbridge Wells house prices, there are so many favorable things,” he continued.
Much interest is coming from London. Work patterns are shifting, with telecommuting becoming an option on two out of seven workdays. Many instances of this may be seen in Tunbridge Wells. Out of the city of London, we still see many kids.
He emphasized that one may still get mortgage bargains even with the increased interest rates.
These days, most people don’t bat an eye while spending more on a vehicle than their home. He predicted that people would eventually adjust to higher interest rates.
Some borrowers are getting offers that are generous but not astronomical. Existing lenders’ rates for customers with excellent credit are still theoretically reasonable.
“Even first-time buyers are finding offers out there, albeit they may have to put down a larger deposit.”
Check out our exclusive 16-page property feature in next week’s Times on newsstands Wednesday, November 16.
