What's happening in the property market at the moment?
Is now a still good time to sell your property? Following two months of falls, average new seller asking prices rose by 0.9% in January 2023. This is the largest rise in prices at this time of year since 2020 and is indicative of sellers testing the market.
What has happened over the past 12-18 months (in a nutshell)?
In the years since the global financial crisis we have seen house prices steadily rising all over the UK with a surge in demand to move home. Post pandemic, with the introduction of stamp duty land tax cuts, house prices soared even further reaching record levels, which coupled with low interest and mortgage rates made the housing market a winning bet.
Some analysts are predicting it looks as though this house price boom may now be coming to a close as a direct result of interest rate rises with experts predicting a 10-15% drop by 2024. Interest rates have risen from almost zero to 3.5% in the last year which reduces buying power and inevitably will lead to house prices falling. People are also experiencing a rise in energy costs which is causing many to review their budgets and home energy efficiency.
For example someone a year ago could afford to put £1,500 a month towards a 25 year mortgage at an interest rate of 1.75% could have borrowed £378,000. Today with an interest rate of 5.5% that monthly mortgage payment is only enough to afford £244,500.
But, it is not all doom and gloom and this does not mean that you cannot afford to move
While mortgage hikes are unavoidable for us all, any reduction in house prices would not just apply to your property and if your house price drops by 10% so does your onward purchase.... so it is all relative!
Rightmove reported buyer demand is up by 4% compared to the same period in 2019 and 55% compared to the two weeks before Christmas. This is the biggest new year bounce since 2016.
Our sources at Dataloft reported mortgage rates also continue to fall as interest rates soften, with some deals for first-time buyers now below 5%. It is a trend which is expected to continue and should encourage this segment of the market to become more active.
For existing homeowners, providing you have equity in your home, there has never been a better time to sell, especially if you are looking to upsize as the savings on your onward purchase would outweigh the loss on your own sale.
Here at Sandersons UK we have not seen a drop in our direct buyer enquiries which shows that demand is still very high and prices aren't necessarily falling. We still have thousands of buyers registered direct with us for property alerts with more registering every week and multiple people competing for the same property. Buyers registering directly with us for our heads up property alerts benefit from being notified about new listings BEFORE they go live on the national portals, Rightmove, Zoopla & OnTheMarket.
Reasons for moving don't change even if the property market does
Many people move house for a variety of reasons, including career and job changes, family circumstances, lifestyle choices, and financial considerations. Moving house can be a stressful process, but it can also be an exciting new chapter in your life you don't want to delay by waiting to see what happens with the market (which could even take years!). Here are some of the most common reasons why people choose to move house:
- Career and job changes – moving house can be necessary to facilitate a job or career transition. This could be to pursue a new job opportunity, to be closer to work, find room for a home office, or to relocate for a promotion.
- Family circumstances – a change in family circumstances, such as having children, or an aging parent or relative needing extra care, can often be the catalyst for a move.
- Lifestyle choices – people often move house to gain access to better facilities and amenities such as schools, entertainment, transport links or to live in a more desirable area.
- Financial considerations – moving house can be a cost-saving measure, particularly with rising energy costs if you can downsize to a smaller home or relocate to a more affordable area.
No matter why you’re moving house, it pays to do your research and plan ahead. A successful move requires thought and consideration, but with the right preparation and organisation, it can be an exciting and rewarding experience.
What are you waiting for?
You might be feeling a desire to move for one of the reasons outlined above but have some concerns about the market. You might also be wondering if it is worth hanging on to see if something changes to make your position more favourable. Here are come common queries we hear from people we are talking to:
- Waiting for interest rates to drop - they have already improved after the initial spike last year but they are unlikely to go back down to under 1.5% anytime soon.
- Believe that prices will drop this year - the number of prospective buyers contacting agents is up 4% compared to the same period in 2019 (which was considered the last 'normal' market). So, demand remains high and exceeds supply in many desirable areas. After two months of falls, the average price of property coming to the market for sale rises again by 0.9% this month (+£3,301) to £362,438
- Can’t see a property that I like - recent data shows the that would-be sellers have jumped into action with 5th January 2023 the third busiest day ever for people asking agents to come out and value their home, an early sign of confidence for the year ahead.
Do people have confidence in the market?
On The Market reported that 73% of active buyers in December 2022 remained confident that they’d purchase a property within the next three months
In December 2022, a UK average 60% of properties were SSTC within 30 days of first being listed for sale, an increase when compared with November 2022 (42%) and December 2021 (53%).
What should I do next?
Demand for property remains consistently high and this is unlikely to change. As a result of the high demand, it is unlikely we will see a substantial reduction in house prices in the near future. But even if we do, remember it's all relative. Interest rates also seem set to stay around the current levels, so we could be seeing a new normal for the property market. Therefore, now might be the time to weigh up what is important to you. If moving home is likely to bring you and your family more happiness and satisfaction, then is putting those plans on hold, just incase there is a sudden market change, really the best thing to do.
