If you read the news headlines these days, you will be forgiven for thinking we are in the midst of a property market crash, with no hope of things returning to ‘normal’ any time soon. Though are things really as bad as they seem?
A Vacuum of Demand
The Stamp Duty Land Tax holiday certainly served its purpose of restoring confidence and helping to get the market moving again after the first lockdown. However, the restricted timeframe of the discount created enormous pressure for all involved in the home moving process.
Additional increased demand was created by the fact that homebuyers had begun to re-evaluate what they wanted from their properties during lockdown, leading many to look for additional space or rural living for example, as home or hybrid working became much more the norm.
These factors, combined with favourable mortgage rates which made the investment affordable for many, contributed to creating a vacuum of demand, which greatly outstripped the supply of properties for sale, leading to a steady increase to property prices and unprecedented levels of activity within the property market.
A Knock to Buyer Confidence
The mini budget in September 2022 marked an end to the notoriously low mortgage rates we had become accustomed to, and the following weeks saw a decrease in property sales volumes and an increase to the number of transaction fall-throughs experienced.
This sudden turn of events negatively impacted both affordability and confidence for buyers, and this was further exacerbated by the doom-mongering headlines being published by the media.
As a result, many buyers and sellers chose to adopt a ‘wait and see’ approach, effectively bringing forward the notorious end of year slowdown.
The Current State of Affairs
Although the market has changed compared to the extremely buoyant conditions experienced from July 2020 until September last year, looking at the actual property data in comparison to recent years, are we really experiencing the downturn that the scaremongers are professing?
Nearly five months on from the mini budget, and fixed mortgage rates continue to decrease, improving the cost of borrowing and helping to restore buyer confidence.
Activity in the property market is also beginning to follow suit and showing small signs of improvement. Week 6 of 2023 saw several positive signals for the property market, including:
- 22,363 properties sold (STC). The highest number this year, as reported by Christopher Watkin, property market expert, as part of the weekly UK Property Market Stats Show.
- 33,448 new property listings for week 6; 3,300 above the weekly average for 2022, and
- Fall throughs decreasing at 22.97% compared to 25.66% for the rolling 4-week average, according to Christopher Watkin using TwentyEA data.
- Propertymark’s latest housing insight report revealed that demand for property is increasing, with the average number of new prospective buyers rising from 39 in December to 70 in January among member branches.
- The average number of sales agreed also increased from four in December to six in January, alongside an 80% increase in new instructions per member branch, according to Propertymark.
- “A modest uplift” in reservations was also reported by Barratt Developments, the UK’s largest housebuilder for January.
An Adjustment to House Prices
While house price growth is currently at a lower level than in previous years, the significant house price growth experienced during 2021 and 2022 compared to previous years is the exception rather than the norm.
A downward adjustment to house prices, closer to pre-pandemic levels would be a welcome outcome for would-be first-time buyers, for whom the dream of getting onto the property ladder has become further from reach in recent years.
While, for those looking to buy as well as sell property, the sale price achieved is of course relative to the price paid for the property they are purchasing, so a decrease to property prices should not be a deterring factor for those looking to move in 2023.
A Longer Lead Time from Listing to Securing Commission
Whilst the number of properties both listed and sold are increasing, the transaction data does reveal a longer timeframe between properties being listed to reaching Sold STC.
For estate agents, this means an extended lead time to securing commission. Being aware of and managing any delays to the process between Sold STC and completion can help to both shorten this duration and enables them to manage client expectations and provide a good experience. All of which can help to minimise potential fall-throughs, which can only be good for everyone involved.
ViewMyChain can assist with this by providing instant visibility of progress at each stage of the transaction, for the entire chain. With automated chain links and dynamic milestone updates, our data-driven sales progression platform, backed by trusted strategic partners enables the property market to stay up to date and effectively manage their chains.
This full chain visibility, combined with live updates enables users to effectively speed up the process from Sold STC to completion, while supporting clients with regular data-led updates to help improve the client experience.
The Outlook for 2023
While it is still early into 2023, these initial indicators of improvement and increased activity in the property market do appear to run contrary to the vast drop-off in property sales previously purported by the media.
When talking to estate agents, it’s clear that the market is still very active, and people still want to ‘get moved’. Though property supplies are now more evenly matched with demand, meaning that the ‘bidding wars’ of recent years may not become as common-place, and the realistic pricing of properties is important to help secure viewings and offers, and help set client expectations.
We will need to look towards the usual boost of activity during the Spring months of March and April to get a clearer picture of how the market is looking for 2023, though initial signs remain positive.