Skip to content

What’s Happening in the UK Property Market in October?

Want to invest in UK property in 2023? Enquire today and gain access to our exclusive investment deals before anybody else.

    An Updated Look at the UK Property Market

    For property investors, keeping track of what’s going on in the property market is an important job to stay on top of.

    Although property is a physical asset, things can change rapidly due to events outside of the market. With this in mind, following the UK property market news is vital for those looking to make investments in the future as well as those who want to ensure their current investments continue to provide strong returns.

    However, it can be not only time-demanding but also confusing to follow property market news, as sifting through headlines to find what is relevant to you is sometimes a headache.

    To help make it easier, we’ve put together this post to cover some of the major property market news headlines from the last month and what they mean for buy-to-let investors.

    Shopping trolley with chart falling down

    House Prices Continue to Fall

    For the past several months, house prices in the UK have slowly but steadily fallen. This has been one of the biggest property market news headlines the UK has seen in 2023, and it’s one that continues to draw attention.

    The latest data from the UK House Price Index indicates that since September last year, when house prices hit an all-time peak, the national average house price has fallen by £7000.

    The BBC reported that Nationwide saw the sharpest annual house price fall in 14 years in July, with the building society claiming that prices dropped by 3.8% from the year before.

    There are several reasons for this, with one of the main ones being that housing was becoming unaffordable for many due to the cost of living crisis the UK is currently facing.

    As well as this, the after-effects of the COVID-19 pandemic saw the housing market become hyper-active with the rise of remote working and people wanting to move after being stuck in lockdown.

    Wales, Scotland and Northern Ireland all also benefited from this growth, although England saw the highest figures when it came to house prices thanks to major cities like London and Manchester. Why not read more about the type of investment property for sale in the UK at the moment with our property investment guide.

    It was only natural for this to reach a peak and begin to fall.

    Because of this, transactions began to fall from their peak, and with this, house prices soon followed.

    While prices have fallen from their peak, high mortgage interest rates deter many from buying property, which means that affordability is still low. While this is another major UK property market news story we’ll cover later on, it’s one that is affecting house prices.

    While this may seem alarming on paper, it is no real cause for worry.

    House prices falling for a few months is actually a sign of a healthy market, and it is acting as a reset button which will help encourage buyers to begin getting back onto the property ladder.

    For first-time buyers especially, falling property prices are a good thing, as it will mean they can afford to take their first step onto the ladder far more easily.

    However, until mortgage rates begin to calm down, it is unlikely for prices to begin to rise again. The UK housing market benefits from slower fluctuation in prices, which helps it to avoid crashes, but it also means recovery can be sluggish. It is still viable to invest in real estate; however, a buy-to-let investment may be the safer option.

    Industry experts from the Office for Budget Responsibility believe that house prices will drop by 10% over the next two years, while property experts Savills indicate this could be a fall of 11%. The Guardian has reported that building society Halifax is predicting a ‘gradual decline’. Estate agents across the country have similar expectations for the foreseeable future.

    Despite this gloomy prediction, it is widely forecast that the housing market will bounce back from this slump and that house price growth will begin to rise once again after they become more affordable for the general public.

    For property investors, this property market news story will likely affect them in two main ways.

    Given that house prices are still unaffordable for first-time buyers, it is expected that there will be high demand for rental properties for the foreseeable future, as potential home buyers choose to avoid the sky-high mortgage interest rates and asking prices and look to rent for a more affordable alternative.

    This means that buy-to-let investors could see a smaller chance of void periods for their investment properties, as well as a rise in their rental income, as the high demand leads to a rise in rents.

    The second possible effect is that buy-to-let investors would be wise not to sell their investment properties until prices rise again.

    Given that investors make a profit on the sale of their properties through capital appreciation, selling an investment property whilst house prices are falling is likely to have a detrimental effect on the returns they see from the sale.

    By holding onto any investment properties they are looking to sell and waiting for prices to rise, investors are able to secure a higher profit from the sale than if they were to sell now while prices are lower.

    It also means that buying an investment property is currently more affordable than it has been in the past, as market values continue to drop. So if you’ve had your eye on an investment property for a while, it might be worth checking the price.

    Mortgage Application on paper document

    Mortgage Interest Rates are Rising

    As mentioned earlier in this post, another major property market news story for August is the recent increase in interest rates the UK has seen.

    When the Bank of England raised interest rates for the 14th consecutive time in early August, this took the base rate up to 5.25%, the highest it has been since 2008.

    In response to this, mortgage providers have raised their rates of interest, which means homeowners are facing increasing mortgage repayments that are becoming less and less affordable for many.

    In an interview with The Guardian, a homeowner with a variable rate mortgage described his current situation as ‘a bloodbath’ due to the increased costs he would now be facing.

    Last month, Sky News reported that the UK has seen the biggest increase in mortgage defaults since 2009 as more and more people find their mortgage repayments to be unaffordable.

    The Evening Standard has been quoted as saying a record-high number of people are leaving London due to interest rate rises. An estimated 30% of these are first-time buyers who cannot afford to buy in Britain’s capital.

    The Bank of England is raising interest rates in an effort to lower the rate of inflation, which has steadily been rising for several months. Higher interest rates mean less spending on expensive goods such as housing and cars, which will lower both inflation and prices.

    The September mini-budget of last year helped to cause hikes in inflation rates as the cost of living crisis became more serious, and the UK is still dealing with the ramifications of this.

    However, this isn’t good for investors who use a buy to let mortgage to pay for their properties. There are some really good investments right now in the real estate market, most of which are off plan investments.

    Buy-to-let mortgages already have higher interest rates on average than standard residential mortgages, and so if rates are rising across the board, then it is likely that buy-to-let investors will face a costly increase in their higher mortgage repayments.

    To combat this, many landlords might opt to increase the rent they charge tenants, but this will probably cause friction with current tenants and could push potential renters away from properties they cannot afford.

    Despite this, it isn’t all doom and gloom. Several major mortgage lenders, including NatWest, Halifax and Barclays, have all cut interest rates on mortgages in response to the Bank of England raising rates, which has helped to alleviate pressure on those expecting high borrowing costs.

    It is also anticipated that inflation will start to fall to a more acceptable level in the next year, which means interest rates are likely to follow. Economists predict that by the end of 2023, the UK will be halfway towards its target of reducing inflation down to 2.2%, with a month-on-month change that could see interest rates increased to 5.75% to further speed up the process.

    While this is important news for the property market, it is likely that this will resolve itself within the coming months. Once rates begin to fall, there will likely be an uptake in property sales that will boost the market, causing house prices to rise again.

    It also means that new-builds and off plan properties are better options for investors looking to buy investment properties right now. Oftentimes, they come with flexible payment plans that spread out the cost of investing and mean investors can avoid the need to borrow a buy-to-let mortgage altogether.

    Buy-to-Let Investment Guide

    Want to become a successful buy-to-let investor? Get our free investment guide today for all the latest tips!

    Download Guide Guide - Buy to let investment guide

    Liverpool Investment Guide

    Invest in the UK's most popular property market. Check out the ultimate Liverpool Investment Guide 2024!

    Download Guide Guide Liverpool Investment Guide
    Wooden blocks with percentage sign and arrow up, financial growth, interest rate increase, inflation, high price and tax rise concept

    Rents Reach a Record High

    As a result of falling house prices and rising mortgage rates, rents have reached a record high, according to the Financial Times.

    Figures published by the Office for National Statistics report that private rental payments made by tenants have gone up by 5.1% since June last year, the largest recorded growth since they began recording the data in 2016.

    This data shows that even with cautious projections for aspects such as house prices, the rental market is still thriving in the current climate.

    The bounceback that the UK housing market experienced post-pandemic is partly responsible, while the rising mortgage rates, which have made buying unaffordable for first-time buyers, are also helping to fuel demand. If you are thinking of buying rental property in 2023, it is a good time to invest.

    This is great for property investors as it means more returns from rental income. This regular cash flow increase can help with mortgage costs and compensate for the downturn in capital appreciation that falling house prices cause.

    It is a direct result of the previous two UK housing market news stories mentioned above, as the year-on-year growth that house prices have seen has priced many would-be homebuyers out of the market, and a slow house building supply has created an imbalance of supply and demand.

    Because of this, landlords have thrived in this market as they are able to charge higher rents to tenants who are not able to find quality rental properties in major cities. Whether you are an American buying property in the UK or if you are buying property in the UK as a foreigner, everyone is welcome.

    Finding high-quality investment properties is an ideal way for investors to make the most of this, as these will see high demand from young professionals who can afford higher levels of rent, bringing investors more month-on-month returns.

    This is one UK property market news headline that is undoubtedly good news for investors. Why not read about some of the best ways to invest £100,000 with our handy guide.

    Learn More with RWinvest

    With 20 years of experience in the property investment sector, RWInvest is one of the most trusted names in the industry.

    Our dedicated team works night and day to keep on top of the latest UK housing market news so we can provide the best quality service possible to our clients and help ensure their investments bring them the returns they expect.

    Contact us today to find out more about our range of buy-to-let investment properties, and discover what we can offer you!

    Why not learn about the new property graduate scheme that has been launched in August 2023?


    Avatar photo

    Reece Pape

    Reece Pape is a property writer at RWinvest. Reece is passionate about keeping property investors updated on must-have information and housing market news, utilising the latest property market statistics and data.