After what has been an unparalleled 18 months of activity for the housing market both locally and nationally, the advent of ‘Trussonomics’ seemed to have brought the market to a grinding halt in October.
The financial markets, the Bank of England and mortgage lenders have reacted with horror to the mini budget. The Chancellor was fired, and the majority of the fiscal, borrowing and tax reduction plans were quickly abandoned as the Bank of England shored up the pension funds. Inevitably, Liz Truss resigned having lost the confidence of not only the country and Parliament, but also her own Party.
November followed with the biggest interest rate rise in 14 years and house prices began to fall. The recent budget saw the return of austerity with higher taxes and reduced budget spending. On the same day, The Office for Budget Responsibility released its November economic and fiscal outlook, which projects house prices to fall by 9% between October 2022 and the middle of 2024.
Our Autumn Housing Market Report provides key statistics on the UK and local housing market, assessing its performance and providing a transparent perspective from the area’s most trusted Agency Brand.
As the market entered the final quarter of the year the runaway house prices of the previous 18 months have ended. High interest rates, inflation and the cost of living are all taking their toll. Expectations were that a general slowing of the market and a return to the typical levels from pre-financial crisis would see a welcome return to normality. This was anticipated to be coupled with a rebalancing of the supply versus demand dynamic of available property and buyer-related appetite. The unanswered question is whether the shock the market received from the ill-judged mini-budget will be short and sharp or have long-lasting ramifications as we now enter a recession.
Jeremy Hunt had little focus on housing-related fiscal policy in the Autumn Statement apart from maintaining the current stamp duty cut. He did, however, announce that the relief will no longer be indefinite, coming to an end in 2025.
Market Outlook
As the year draws to a close, the outlook for 2023 looks far from certain and it’s easy to be carried along with the wave of negative headlines which bombard us daily. It would perhaps be prudent to focus on what is happening right now before we draw hard conclusions.
In October, the Ashtons Group achieved, on average, 99% of the guide price for our clients’ properties. Available properties across the Group are up by 61% when compared with the end of October last year. Whilst prices have had to be adjusted to stimulate purchaser activity, the average number of days on the market to sale agreed fell from 51 days in January 2022 to 29 days in October. It is evident that underlying buyer sentiment remains strong despite the economic headwinds.
The Property Sentiment Index from Onthemarket.co.uk showed 74% of active buyers in the UK were confident that they would purchase a property within the next 3 months, and 82% of sellers in the UK were confident that they would sell during the same period. Critically, despite the recent significant rise in the Bank of England base rate, fixed-rate five-year deals from the major lenders have started to fall below 5%. Indications are that these will drop below 4% in the first quarter of 2023.
The appetite to move therefore remains strong and the rebalancing of property prices, the now falling cost of borrowing and wider availability of homes could all lead to a very active Spring market next year.
For an obligation free chat about how you are positioned within the current property market and how you can best approach marketing your home in the New Year, get in touch today.
