Could house prices crash if interest rates rise

Britain’s property prices are so high and wages are so low that it only takes one interest rate hike to topple the market.

This is because housing across the UK is becoming increasingly unaffordable and the higher interest rates go, the higher it costs to service debt.

HSBC recently released its “UK Housing Market Chartbook (July),” which has nearly 50 charts that summarised the state of Britain’s property sector.

Nestled within it are some pretty startling charts that show how unaffordable housing has become in Britain.

Now, the naysayers that believe property prices will remain high no matter what say that the fundamental supply and demand balance will always keep prices propped up. After all, if there are too many people looking for a house, but not enough to go round, prices will always be buoyant.

Plus, interest rates have remained at a record low of 0.5% since March 2009 and it looks like rates will either stay the same or be cut further, thanks to the economic uncertainty surrounding Brexit.

However, unless households have heaps of savings tucked away, or a wage rise, a hike in interest rates could tip a lot of people over the edge.

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Written by: Houseladder