Market Comment (July 2023)
Summer is often a challenging time in the UK property market because many people have got far better things to do with their time than move home. This is a time of year when many people consider their options for later, or start to put plans into place.
We appreciate some of the news stories about the UK housing market right now don’t make for the most pleasant reading, but there are signs of resilience in the property market.
Also, we are experienced agents who have been through peaks and troughs in the market before. Our expertise is available for you to ensure you make informed decisions, so if you are looking to move in 2023, or beyond, Trading Places is here for you.
Doubts about UK house prices ability to rebound
Over the long-term, property prices rise. This is why so many people still believe in the benefits of bricks and mortar assets when it comes to investments. Of course, over a shorter time-frame, there are more fluctuations, and we all know these are challenging times in the UK housing market.
A number of respected sources and economists believe UK house prices will continue to fall, and won’t rebound quickly. There are many reasons for this, but higher interest rates is a significant issue.
S&P Global Ratings, predictions for the UK housing market include:
· A 6.6% drop in 2023
· A 4.9% fall in 2024
Then, they predict a period of stagnation, with growth of 1.4% in 2025 and 3% in 2026.
S&P are not alone in this sort of outlook, with Moody’s (a global risk assessment firm) making a similar prediction.
Moody’s predictions for the UK housing market include:
· A 4% drop in 2023
· A 6% fall in 2024
Madhavi Bokil, senior vice-president at Moody’s, said: “We expect the Bank of England, faced with the responsibility to bring stubbornly high inflation down, to maintain a tight monetary policy stance through 2024. The effects of interest rates on housing demand in the UK are therefore likely to be acute and prolonged.”
Madhavi continued by saying; “More than 90% of all mortgage holders in the UK are on fixed deals spanning between two and five years. The bulk of homeowners have yet to experience the jump in interest rates from 0.1 per cent to 5% because of the duration of their loans, but more than 1 million will have to renew their loans in the second half of this year.”
Interest rates expected to increase further
Even with interest rates cited as a factor in falling property prices, there is a belief that interest rates will increase again in August.
Nathan Emerson, CEO of Propertymark, said: “As core inflation remains sticky, it is increasingly likely that the Bank of England will consider further interest rate rises. This has obvious impacts on mortgage holders, new and old. However, we are seeing a good amount of resilience in the market and serious buyers will continue to make a gain on the price achieved whilst sellers find a happy medium when negotiating the final agreed sale price.”
Market still showing resilience
While it is easy to say there is so much doom and gloom in the housing market, this is far from the full story. We are meeting with sellers and buyers every day, and there are always reasons people have to move home.
Industry experts also point out the market is performing better than many have predicted, and could continue to do so for some time.
Jason Tebb, CEO of OnTheMarket, said: “These numbers are a little historic but show the continued, gentle slowdown in annual price growth in May, with the average property price still £6,000 higher than a year ago. The housing market continues to show remarkable resilience considering the economic uncertainty. News that inflation is not only moving in the right direction but at a faster pace than expected will provide some reassurance. After so many interest rate rises, affordability is a challenge for many buyers relying on mortgages so sellers keen to get a deal done in a timely fashion must price carefully.”
No matter the move you make in the property market, it is vital to make an informed decision. Now, this is even more true. As local property market specialists, we are on hand to discuss your situation, and offer guidance as best we can.
If you are a Leytonstone or London homeowner looking to sell up and move out of the capital, we are here to assist you.
If you would like to learn more about Leytonstone, what the area has to offer, and how to achieve your goals in the local property market, we can help. To arrange an appointment, call us on 020 8558 1147 or send us an email at info@tradingplacesproperty.com
You will find Trading Places Estate and Letting Agents at 46 Church Lane, Leytonstone, London, E11 1HE; and we look forward to assisting you.
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