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Highlights
- Home buyers with mortgages in the UK are set to experience a 28% hit to their buying power next year.
- As per Zoopla, the most crucial element for the housing market this autumn is the latest hike in mortgage rates faced by new borrowers.
New figures have revealed that home buyers with mortgages in the UK are set to experience a 28% hit to their buying power next year. According to Zoopla's house price index, the most crucial element for the housing market this autumn is the latest hike in mortgage rates faced by new borrowers.
If the mortgage rate hits 5% by the end of 2022, the purchasing power of property buyers will go down by as much as 28%. This presumes that buyers would not want to change their monthly repayments. Additionally, the cutbacks in asking price are set to bounce back to the pre-Covid levels.
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Nevertheless, despite the increasing cost-of-living burden in the country, house price growth remains stable at 8.2% year-on-year. Some regions like Wales and Scotland witnessed 10 years of development over just two years of the pandemic.
Home buyers have three choices to counter the impact of purchasing power reduction, as per Zoopla. These include putting down a bigger deposit, channelling a higher portion of their earnings towards mortgage costs, modifying their budgets, buying a smaller home, or going in for a cheaper neighbourhood.
As purchasing power takes a hit, UK investors can explore the following real estate stocks and carefully analyse their performance.
CT Property Trust Ltd (LON:CTPT)
CT Property Trust Ltd’s market cap on Thursday stands at £173.69 million and was trading at GBX 71.80, down by 2.71%, at 8:30 AM (GMT+1). On YTD (year-to-date) basis, the company's return as of 29 September stands at -15.93%. Meanwhile, its yearly returns stand at -1.10%. With a P/E ratio of 2.77, the company's yearly dividend yield stands at 4.4%.
Palace Capital plc (LON: PCA)
Palace Capital plc is a prominent regional property-focused investment group. The PLC’s market cap stands at £101.27 million, and its shares were trading to GBX 230.00 at 8:34 AM (GMT+1) on Thursday. On a YTD basis, the company's return as of 29 September stands at -13.77%. With a P/E ratio of 4.34, the company's yearly dividend yield stands at 4.6%.
Custodian REIT Plc (LON: CREI)
The market cap of the REIT involved in investments in commercial properties, CREI, stands at £401.61 million. On a YTD basis, the Custodian REIT Plc’s return as of 29 September stands at -13.77% and its shares were trading at GBX 91.10 at 8:40 AM (GMT+1). With a P/E ratio of 3.20, the company's yearly dividend yield stands at 4.6%.
