There is a single, inviolable truth about the housing market: property prices are inversely correlated to interest rates

When rates are low, mortgages are cheap and house prices rise. When they go up, debt becomes more expensive, demand collapses and the market is forced to adjust. 

If that basic fact sometimes gets forgotten it’s because we have been living in the former state – a low interest rate environment – for over a generation and a half.

Buyers and sellers are in a stand-off, with the former unprepared to commit until prices fall, and the latter unwilling to drop their prices.

Today’s homeowners have such big mortgages that interest rates at 6 per cent would cause as much pain as those of 15 per cent did when the market crashed in 1989.

It’s likely that we are currently living in the lag – a delay between Wile E Coyote running off the cliff and gravity starting to take effect.

At the moment, many in the property industry are desperately pawing fresh air trying to convince themselves and everyone else that we haven’t run out of road or that the landing will be soft.

Ben Wright Telegraph 25 February 2023

https://www.telegraph.co.uk/property/news/have-entered-property-ice-age-coming-next/