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House prices across London dropped or remained static compared to this time last year, according to the Evening Standard, in a sign that the slowdown of the property market is accelerating following the pandemic boom years. However, Hackney in London bucked the trend, showing an annual growth of 4.4% to take the average asking price to £732,000.

Hackney is one of the most popular neighbourhoods in London, thanks to good transport connections and a vibrant community atmosphere. It’s packed with cool shops and places to eat, and the infrastructure has benefited from the legacy of the 2012 Olympic Games. Despite the regeneration, the area has retained its authentic charm and character.

This is reflected in a buoyant local housing market that is bucking the wider trend across London and the rest of the UK. After inflation rates fell by less than expected in June, the Bank of England is predicted to raise interest rates to as high as 6% by the end of the year. This will have a knock-on effect on mortgage rates.

The Guardian reports that higher mortgage rate deals due to start over the next 12 months will hit homeowners in London and the southeast the hardest, with people in their 30s facing the biggest monthly increases, of up to £360. 

Thomas Wernham, a research Economist at IFS, said: “Many families bought homes – often with sizeable mortgages – when interest rates were very low. As people’s fixed-term offers come to an end, they are going to be exposed to much higher interest rates. For many, the increase in monthly repayments is going to come as a serious shock.

“Given the cost of living pressures people are already facing due to high food and energy price inflation, these significant increases in mortgage costs could not come at a worse time.”

Meanwhile, property prices are expected to fall by an average of 2% this year, as mortgage rates hit the affordability of upsizing or getting onto the first rung of the property ladder. 

Tim Bannister, Rightmove’s director of property science, said: “Average new seller asking prices, the first and leading indicator of new trends in the market, have dropped slightly this month, signalling that the belated spring price bounce has quickly turned into an earlier-than-usual summer slowdown.”

He added: “We expect asking prices to edge down during the second half of the year which is the normal seasonal pattern, and while we sometimes re-forecast our expectations for annual price changes at this time, current trends suggest that our original forecast of a two per cent annual drop in asking prices at the end of 2023 is still valid.”

According to the Institute of Fiscal Studies (IFS), higher interest rates could result in 1.4 million mortgage holders in the UK experiencing up to an unwelcome 20% drop in their disposable income. 

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