housing market

Comment is made by Spectre as it launches quarterly report, with forecasts showcasing data from the first quarter of 2023.

Spectre says that the housing market isn’t as bad as the media is portraying and that for those with the right skill set it will prove no challenge whatsoever.

The findings come from the proptech provider’s first Market Report, published today, which showcases data from the first quarter of this year alongside data from 2022 and 2021 as well as a five-year average.

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Decline

The housing market report says: “The number of properties dropping their prices is through the roof, there’s a continual decline in agreed sales and listings are taking longer to shift.

“In any other market, this should be a cause for concern and understandably, fear has been spreading.

“However, for the last few years, the property market has seen exceptional growth.

“These movements should be seen as market conditions normalising and returning to a more manageable baseline – rather than viewing them as drastic shifts compared to last year. The market is still healthy and for those with the right skill set, it will prove no challenge.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

Leaderboards

The report also includes leaderboards of the top UK agents (by new listings and sales agreed), the average number of days a listing was on the market until sold STC, and the percentage of property sold by region.

Heather Staff, Co-founder of Spectre, says: “We’re so excited to launch this report at what is a crucial time for agents to have visibility on their market.

“Following such turbulent years for the market, using data to project what is to come gives agents the best chance at future success.

“Agents can use the report to underpin their marketing and prospecting strategies, confident in the knowledge they are fully aware of not just the market that has been but also the best forecasts for what might happen.”

By Robyn Hall

Source: The Negotiator

Traditionally one of the busiest periods for the property market, Spring is finally here and, as Nicky Stevenson from Fine & Country notes, the further rebalancing of the market this spring has seen buyer choice increasing and price growth moderating.

Stevenson comments:

“Current housing market metrics point to a mixed picture for the housing market. Sales volumes in February were some 9% lower than the pre-pandemic average, although with average conveyancing times in the region of 12 to 16 weeks, this reflects the market in the immediate post-mini-budget period. Both Rightmove and Zoopla report that as spring takes hold, demand for property remains above pre-pandemic levels.”

Although mortgage approvals are significantly lower than previously, the 10% uptick in approvals between January and February marks the most significant increase at the start of a year since 2011.

Stevenson adds: “The middle of March saw average two-and five-year fixed-rate mortgage deals at six-month lows and although the Bank of England raised the base rate of interest to 4.25% on 23rd March, there has been little change in the 5-year swap rate, indicative of longer-term stability in the market.

“According to Moneyfacts, product choice for first-time buyers, home movers and buy-to-let investors has risen recently, with rate competition between lenders intensifying, especially for those with lower loan-to-value (LTV) ratios and who are looking for longer-term fixed-rate options.”

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According to Stevenson, there were few surprises announced in the Chancellor’s Spring Budget with housing per se absent from an agenda which focused more centrally on boosting employment and enterprise.

She says: “More pertinent were the official forecasts released to accompany the budget by the Office for Budget Responsibility. The UK economy is now predicted to contract by just 0.2% over the course of 2023 and is technically set to avoid recession, while interest rates are expected to peak at a level lower than the 5% forecast less than six months ago.

“Although the rate of inflation rose unexpectedly in March to 10.4%, cost-of-living rises are set to ease. This is partly due to the government’s energy price cap guarantee being extended until June and the rate of inflation forecast to fall sharply to 2.9% by the end of the year.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

Despite Help to Buy ending on 31st March, no new schemes to support home ownership were announced, although as part of the government’s Levelling Up agenda twelve new investment zones across the UK will be created. This will support house price growth in these areas over the medium term.

Stevenson comments: “With the ratio of new sales to new instructions returning to pre-Covid levels, the demand/ supply imbalance that fueled price growth is correcting. Nationwide report that average property prices fell by 3.1% in the year to March, however, they remain 17% higher than when the country went into lockdown three years ago. Over the past year, properties in the upper echelons of the market remain resilient with prime prices rising by 9%. That said, sensible and realistic pricing is still paramount to achieving sales success.”

She concludes: “Rightmove report that activity levels for smaller properties, so those with two bedrooms or less, are just 4% lower than in the last ‘normal’ market of 2019, while sales volumes for larger properties are lagging by 10%. With tighter budgets, buyers also appear to be more conscious of property conditions. According to a Dataloft poll, ‘ready-to-move-in’ is the most sought-after feature for current buyers, ranking above the garden or homeworking space demands that typified the post-pandemic market.”

Source: Property Reporter

The latest industry index on property fall throughs by property purchasing specialist, House Buyer Bureau, has revealed that despite a quarterly reduction in both the volume and cost of the average fall through in Q4 2022, the total annual cost to UK homebuyers and sellers topped £1m in 2022, a 6.3% increase on the previous year.

House Buyer Bureau analyses the number of transaction fall throughs across the UK property market, what this means in terms of the average cost of a fall through and what the total cost to the property market is as a result.

The latest index for Q4, 2022, shows that a cooling housing market did present a silver lining in the form of a reduction in fall throughs. The latest figures show 75,809 homebuyers and sellers were subject to a property sale collapse, a -15.9% drop on the previous quarter as market activity started to slow.

The cost associated with a property fall through also fell marginally by -0.8% to an average of £3,311. As a result, the total cost of sales to have collapsed during the final quarter of last year totalled just shy of £251m, a substantial figure, but one that sat -16.6% below the previous quarter.

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However, while there may have been a reduction in both volume and cost on a quarterly basis, the number of fall throughs seen in Q4 2022 were still 16.9% higher on an annual basis, with the average cost up 11.4%, while the total quarterly cost was also up 30.2% versus Q4, 2021.

The index by House Buyer Bureau also shows that the total cost of fall throughs endured by the nation’s home sellers and buyers totalled just over £1.03m throughout 2022 as a whole.

Not only is this an increase of 6.3% on the previous year, but it’s the fifth year in a row that this figure has increased and marks a 75% increase versus 2018.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

Managing Director of House Buyer Bureau, Chris Hodgkinson, commented: “There’s no denying that the market has now started to cool and while this may bring its own concerns, a reduction in both sales volumes and house prices during the final stages of last year has, at least, seen a drop in the number of transactions that are collapsing on a quarterly basis, as well as a reduction in the cost incurred by buyers and sellers.

“There is, of course, a seasonal element at play here as well, with the final months of the year traditionally bringing a lull in market activity.

“However, this quarterly market gauge of instability not only remains higher when compared to the final quarter of 2021, but when viewing 2022 as a whole, the total cost to the industry has also continued to climb, breaching the £1m threshold.

“It will be interesting to see where we sit during the first quarter of 2023. It’s predicted that the market will stand fairly firm which could well reverse the current downward trend in fall throughs as buyers and sellers return to the fold and market activity increases.

“When you also consider the additional volatility caused by the cost of living crisis and increasing cost of borrowing, we expect this will probably be the case.”

By Brandon Russell

Source: IFA Magazine

The total value of UK homes jumped 51% to a record £8.7trn last year, says Savills, but adds that this rise “will represent a high watermark for the value of the nation’s housing stock” for several years.

UK homes lifted by £425bn in 2022 compared to a year ago, a lower amount than the previous two years, but still contributing to a 23% surge in value since 2019.

“The growth in house prices over the past three years has added considerably to the paper wealth of homeowners, driven in no small part by the well-documented ‘race for space’ over the period,” says Savills head of residential research Lucian Cook.

Owner-occupiers have been the biggest beneficiaries of this growth, says the estate agency.

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It says almost 40% of the house value growth over this period was enjoyed by those who have paid off their mortgages, amounting to £645bn, while mortgaged owner-occupiers accounted for 34% of the increase, or £549bn.

Cooks points out: “Not only have we continued to see people who benefitted from the homeownership boom of the latter part of the 20th century joining the ranks of the mortgage-free, but there’s also been a modest recovery in numbers of mortgaged homeowners, due to increased levels of first-time buyer activity over the period.”

But, he adds, over the last five years, landlords have come under pressure “due to increased regulation and taxation despite rising tenant demand”.

From 2012 to 2017 the value of private rented stock lifted by £495bn, Savills estimates, more than the £443bn growth in the value of homes owned by mortgaged homeowners.

But over the five years to the end of 2022, the value of private rented stock rose by a much lower £222bn, while mortgaged owner-occupier homes added a total of £669bn to their value.

The agent adds that over the next “four or five years” house values may ease due to the cost and availability of finance combined with lower levels of house building.

Cook says: “Recent figures from HMRC indicate that buying activity peaks among those in their 30s, with the under 45s accounting for 59% of all purchases.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

“While the purchasing power of older buyers is more determined by the housing equity they have accumulated, younger buyers require finance which means the mortgage markets are the engine room of the housing market.”

“Recent interest rate rises are going to continue to put first-time buyer and second-stepper budgets under pressure in 2023 and 2024.

He adds: “Combined with the prospect of lower levels of house building, we expect that 2022 will represent a high watermark for the value of the nation’s housing stock for a few years.

“At the same time, activity among younger buyers that has improved in recent years is likely to come under more pressure, which will present a particular challenge for policymakers.”

Savills drew its figures from the latest Bank of England records, which show that outstanding mortgage debt stood at £1.7trn, meaning that net housing wealth topped £7trn for the first time last year.

By Roger Baird

Source: Mortgage Strategy

Even though the UK is now seeing the steepest slump in property prices since the 2008 financial crisis, London’s luxury residences are managing to defy Britain’s housing market downturn, reported The Business Times.

Fifteen homes in Central London valued at £5 million or higher were registered as sold in the fourth quarter of 2022—which is 63% higher than the pre-pandemic average, according to researcher LonRes. “It’s not surprising, therefore, that it tempted would-be sellers to put their homes onto the market,” said Anthony Payne, managing director at LonRes.

UK Housing Market Poised for Disruption

The UK’s housing market is facing a ‘perfect’ storm as it tries to eke out growth while coping with the surging cost of living, hiking mortgage and inflation rates, and the risk of recession.

The result: rapid cooling in property demand and sales activities leading to a selloff in the UK’s housing market.

Let’s look at how much the British housing market and buyer demand have been impacted by current economic setbacks:

• British home prices slid in December 2022 by the most in 13 years and are predicted to slip by a whopping 20% in 2023 if the UK’s base rate continues to hike, according to The Guardian.
• The Bank of England has been raising the base since the beginning of 2022 as part of its effort to return inflation to its 2% target level. The bank rate has gone up to an annual rate of 4.0% in February 2023—a jump of 0.5% from 3.5% in December 2022.
• On the other hand, surveyors registered a net balance of -47% for new buyer inquiries in January 2023, plunging from -40% in December 2022.

In such a circumstance, analysts have unanimously agreed that the UK’s property market is facing more turbulence this year.

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Wealthy Buyers Are Snapping Up London’s Luxury Property

Despite the present economic upset throughout Britain, luxury sales in London are skyrocketing, outshining the UK’s housing market.

But why?

First off, even though the interest rate and mortgage rate have hit an all-time high this year, millionaires and elites are less likely to get affected by the impacts of the increase, as they’re less dependent on borrowing.

Secondly, Britain’s pound continues to tumble sharply against the US dollar, dropping a full cent to around $1.20.

Part of the weakness of the pound sterling is the increase in power of the US dollar which is attracting more international investors and wealthy buyers to flock to London’s priciest homes.

Case in point: In the first half of 2022, overseas buyers purchased 48% of the total luxury home purchases in Prime London—a jump from 13% from 2021.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

That said, the demand for luxury property management services offered by agencies like The London Management Company is getting a push, with ultra-high-net-worth buyers investing in upscale properties in Central London.

Offering bespoke services—from maintenance to upkeep and housekeeping—a class-leading agency ensures a client’s luxury property is well-managed, squeaky clean, and always ready for their arrival.

However, in the final quarter of last year, home sale activities decreased in Greater London due to climbing mortgage rates, soaring inflation, and high base rates.

“The final quarter of the year saw a change of direction,” stated the managing director at LonRes. “We’ll be keeping a close eye on how the market unfolds in the months ahead.”

Wrapping Up

Outperforming Britain’s housing market, London’s luxury houses are seeing substantial growth this year.

Source: Digital Journal

Research from eXp UK, the network of personal estate agents, reveals that reduced homebuyer activity has led to a -30.5% drop in UK house sales, and that one Scottish city is the only place to report an increase in transactions.

Following the house buying boom, kick-started by the Covid-19 pandemic, the UK’s market has started to cool as buyers act with caution in the face of recent widespread economic uncertainty.

Over the last 12 months, there have been 843,600 sales transactions completed across the UK. This marks a drop of -30.5% compared to the 12 months previous during which there were 1.2 million sales.

A regional analysis of the UK market shows that each and every corner of the land has seen a decline in sales, nowhere more so than the East of England where the annual figure has dropped by -37.3%, from 125,808 to 78,887.

In the South East, sales have dropped by -37.2%, closely followed by the South West with a -37.1% decline.

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The drop in transactions has also been significant in London (-35.3%), the East Midlands (-31.9%), West Midlands (-30.8%), Yorkshire & Humber (-29.7%), North West (-28.3%), North East (-23.6%), Northern Ireland (-22.5%), and Wales (-19.6%).

The smallest drop has been seen in Scotland where a decline from 121,544 transactions to 105,465 marks an annual drop of -13.2%.

After a hyper-local analysis, eXp discovered that Maldon, Essex, has reported the nation’s biggest annual drop in sales at -49.4%.

Uttlesford, also in Essex, reported a transaction decline of -48.3%, while Harborough, Leicestershire, recorded a -47.4% decline.

Meanwhile, the smallest decline in sales transactions have been seen in East Ayrshire (-8.8%), Blackpool (-4.8%), and Clackmannanshire (-4.2%).

However, there is one UK location that has bucked this wider trend to see an uplift in transactions.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

The City of Aberdeen is the only place in the UK to report an increase in sales over the last 12 months, with numbers rising by 4.1%.

Head of eXp UK, Adam Day, commented: “The UK’s housing market has cooled slightly in the past year. Buyers have been cautious in the face of economic uncertainty, and this has understandably contributed to a decline in the number of homes sold.

“But it’s also important to note that there was an incredible surge in market activity during the peak of the pandemic and so while this decline in transactions may seem drastic, it’s really a return to normality.

“There remains a strong level of buyer activity across the market and house prices have not tumbled in the way many predicted they would. The current outlook for the market is also far brighter than it was just a few months ago and so those predicting a property market crash are likely to be disappointed come the end of the year.”

By Alice Cumming

Source: Business Leader

For anyone thinking of buying or selling property in 2023, it is a good idea to take stock of what the property experts are predicting for the year ahead. Many people are asking the question – will house prices fall in 2023 and is it a bad time to sell? The other major concern is what type of mortgage to take out for homeowners whose fixed rates end in 2023.

This article provides a summary of forecasts from some of the top property experts, which should help you to understand how the property market could impact you in 2023.

What is the current property outlook?

Heading into 2023, there are early suggestions that the property market could be in for the biggest house price fall since 2008. The combination of high mortgage interest rates and the cost of living crisis are adding up to a possible property value crash. Of course, experts have shared forecasts of property market declines before, which were never realised, but there is a growing number of signs that the UK is bracing for significant house price falls.

Throughout the pandemic, many homeowners saw their property value grow substantially due to the housing boom, with the stamp duty holiday helping to boost the property market following the slowdown during lockdowns. Now many experts are forecasting that the bubble is about to burst.

At the end of 2022 the property market had already shown indications of a declining trend. In November, the average house price dropped by 2.3%, which was the biggest drop since 2008. December marked the fourth consecutive month of declining property prices, which was also the longest run since 2008.

Savills Estate Agents are predicting that house prices will fall by 10% during 2023. Halifax are predicting a similar figure of 8%, while Nationwide are expecting a less extreme fall, predicting a 5% drop before the market stabilises to just below pre-pandemic levels.

Mortgage interest rates

Following the mini-budget in September, many lenders removed mortgage products from the market, leaving many potential property buyers unable to get onto the property ladder. Mortgage rates soared to over 6%, while the average five-year fixed rate stands at 5.6% at the start of 2023, which is considerably higher than interest rates were at the same time last year. With mortgage rates at a much higher rate than they have been in recent years, people are being priced out of getting onto the property ladder or buying a bigger home, preferring to wait to see if mortgage rates start to come down again. Prospective buyers are being cautious, as they are worried about a potential house price crash that could leave them in negative equity.

This is reflected in the 28% year-on-year reduction in property sales reported by Zoopla in December 2022.

This slowdown in property sales and reduction in demand impacts the house prices, with sellers being forced to reduce asking prices to enable them to secure the sale. Zoopla recently shared that sellers had reduced the asking price by an average of 4% in December 2022 to achieve a sale.

There will be some exceptions of sellers who will not be forced into reducing asking prices, for example, where there is a higher demand for a certain property type or properties in a much-sought-after location, which we discuss further on in this article.

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Cost of living crisis

The UK has been experiencing an ongoing cost of living crisis, with inflation increasing at a higher level than wages. UK households are dealing with exceptionally high energy bills, as well as price increases on fuel, groceries and many other living costs. The inflation rate is expected to ease later on in 2023, which should, in theory, improve the finances for many UK households and provide more disposable income that could be used for buying property.

Remortgaging options – fixed rate or variable?

According to the Office for National Statistics, more than 1.4 million households in the UK will face increased rates as their mortgage renewal is due in 2023. It is a worrying time for homeowners who have been on a lower fixed rate for several years, who now face the decision of whether to enter another fixed rate term or to opt for the unpredictability of a variable rate mortgage.

Around 57% of the fixed rate mortgages that are coming to an end in 2023 were on fixed rates of below 2%, so moving onto rates of between 4% – 6% will be a huge financial burden for so many. Any homeowners who may have been considering moving into a bigger property are likely to be put off by the current interest rates, further reducing the demand for properties and impacting house prices.

As homeowners approach the end of their fixed mortgage, they have to make the choice of being tied down to a higher rate mortgage for 2 or more years or take more of a gamble by choosing a variable rate mortgage in the hope that rates will start to fall in the near future. Mortgage advisers are being inundated with queries about which option will be more financially beneficial, but it is too difficult to forecast when the mortgage rates will start to fall.

Shortage of housing stock

The continued shortage of housing stock shows no signs of being resolved, with the government currently failing to meet targets to build 300,000 new homes each year. The shortage of new houses being built, coupled with high mortgage rates and increased living costs is likely to keep the rental property market buoyant. With more would-be homeowners choosing to wait to buy a property, this is expected to further increase the demand for rental properties.

Regional variations in house prices

While many experts are predicting a slide in house prices, rather than a crash, there are some areas of the UK and property types that should buck the trend. Over the last few years, there has been a surge in demand for properties that are in more rural locations, allowing people to spend more time outdoors and buyers are also looking to purchase more spacious properties. Semi-detached properties and terraced houses are the most in demand, with flats at the lower end of demand.

With many home buyers having more flexibility around their working location, some buyers in 2023 will be reviewing the options of buying properties in areas where they can get more for their money. Over the last few years, the North of England has become popular with buyers who are not tied to one location for work and with an increased population of people working from home compared to pre-pandemic, this trend looks set to continue.

Cheaper property prices in the North of England have been attracting property investors who can build up their property portfolio faster by purchasing cheaper options than areas such as London and the South-west of England. However, mortgage rate increases will have a big impact on property investors who do not have capital for property purchases and need to take out mortgages.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

Property investment

The high mortgage interest rates at the start of 2023 are bad news for investors who were planning on taking out buy-to-let mortgages to boost their property portfolios, and investors are likely to be more cautious in 2023 until rates start to fall. However, if there is a house price crash, this will present excellent opportunities for both residential buyers and property investors who can take advantage of lower property prices.

Property investors can gain a return on investment from both their rental yields and any house value increases that occur while they own a property, so even if house prices fall over the next year or so, there is still a good chance that there will be generous capital growth over several years. With a high demand for rental properties, there should also be less voids and the ability to charge high rental yields.

Conclusion

While there is a large number of property experts predicting a significant fall in house prices in 2023, this can help many people to get onto the property ladder once mortgage rates start to fall, which is expected to happen over the course of the year. However, at the start of the year while mortgage rates are still high, prospective first-time buyers and homeowners looking to upsize are being cautious and waiting to see if mortgage rates fall.

Homeowners who saw a large increase in house value since the pandemic could stand to lose those gains, unless they are able to secure a sale before house prices start to fall.

Property investors who do not have to borrow money from mortgage lenders to buy property will be eagerly awaiting the predicted house price falls, but overall, estate agents can expect to have a quieter start to the year for house sales until momentum picks up again when mortgage rates start to fall.

U.K. asking prices kicked off 2023 with the largest increase logged at this time of year since before the pandemic started, in what may be a tentative sign of stability for the market, according to a report Monday from Rightmove.

On the heels of two months of declining values, the average asking price for new listings ticked up by 0.9% to £362,438 (US$443,462) in the four weeks between Dec. 4 and Jan. 7, as New Year sellers tested the market, the online property portal said.

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Asking prices usually rise in January, and “the seasonal increase in new-seller asking prices this January from December is particularly encouraging for movers who are looking for the reassurance of familiar trends and a calmer, more measured market,” Tim Bannister, Rightmove’s director of property science, said in the report. He added that it was a positive change from the “chaotic economic climate of the final few months of last year.”

Despite the uptick, asking prices remain £8,720 less than their October peak, he added.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

In a further positive sign, the number of prospective buyers contacting agents was up 4% compared to the same period in 2019, and up by 55% compared with the two weeks before Christmas, the biggest New Year bounce since 2016.

Though, demand was still down by 36% compared to last year.

“Given that the pause for Christmas came unexpectedly early last year, it was important to see whether buyers and sellers would pick up their plans again at the beginning of this year or wait to see what the first few months might bring,” Mr. Bannister said. “The numbers certainly suggest that activity has bounced back after Christmas.

He said he expects the mortgage rate increases and lack of affordability to hold back some segments of the market over the next six months. “But our leading market indicators may start to identify some green shoots of growth that will go on to strengthen in the second half of 2023,” he added.

By Liz Lucking

Source: Mansion Global