🔻 1. High Interest Rates
The Bank of England has raised interest rates multiple times to combat inflation.
Higher interest rates = more expensive mortgages, reducing what buyers can afford.
This causes demand to drop, which puts downward pressure on prices.
💸 2. Cost of Living Crisis
Ongoing high inflation has reduced people’s disposable income.
Even if interest rates stay the same, people have less money to save or spend on buying property.
🏠 3. Falling Demand, Rising Supply
Fewer buyers are entering the market due to affordability issues.
At the same time, more properties are being listed, especially by landlords selling up (due to higher taxes and regulation).
More supply + less demand = lower prices.
📉 4. End of Pandemic Boom
During the pandemic, house prices surged due to:
Low interest rates
Stamp duty holiday
Desire for more space (work-from-home trend)
That boom is now correcting.
🌍 5. Economic Uncertainty
Uncertainty about jobs, economy, and global events (e.g. war, climate risks, etc.) makes people less willing to take on big financial commitments, like buying a home.
🧾 Example from 2025 (if current trends continue):
As of mid-2025:
Annual house price growth has turned negative in many regions.
London and South East have seen some of the biggest drops due to higher prices being more sensitive to rate changes.
Buyers are negotiating harder, and sellers are dropping prices to close deals.
