Do you prefer the good news or the bad news first?
I always prefer to get the bad stuff out the way and end on a more positive mindset.
So that is how this I’m going to approach this month’s market update, I’ll begin with some of the negative news and end on a high!
Bad news …
The Nationwide Building Society’s house price index paints a negative picture. There has been seven months of declining prices which has left average house prices 4.6% below their August peak.
The housing market is forecast to be smaller in 2023 than in 2022. UK finance mortgage lending is forecast to be down 15% to £275B and house purchases are forecast to be down 21% at 1.01M.
The RICS UK Residential Market Survey published in March 2023 has some downbeat data. The metrics for buyer enquires (-29%), agreed sales (-31%) and new instructions remain negative. It also found that 43% respondents reported a decline in house prices.
Further data released recently show the sale of new build properties dropped dramatically in February 2023 by 25% compared to a year earlier. This compares to a drop of 18% in second hand properties in the same period.
The reason is new build sales are usually targeted at first time buyers who are reliant on mortgage lending, which since the mini budget in September 2021 have been harder and more expensive to take out.
In a further blow to new build sales the government’s Help to Buy scheme has recently ended. It helped those with a small deposit buy a new house.
Now for some good news …
The Halifax data is more upbeat. They have seen a +0.8% average price increase in March, following a +1.2% rise in February. That puts the annual change at +1.6%.
Halifax puts the price rises down to the decrease in mortgage costs since they spiked in October 2022 and the continuing strength of the employment market, with unemployment at a historical low of 3.7%.
So how low are mortgage rates? They are down by more than 1% over the past couple months. Virgin have the cheapest 5 year fixed rate at 3.8% and Barclays have the lowest 2 year fixed rate at 4.1%.
In further signs of the mortgage market improving the number of low deposit mortgage deals is higher than at any point since September 2022, according to data provider Moneyfacts. The number of 95% deals has risen to 206, up from 161 at the start of March.
James Raspin, Chief Surveying Officer at Survey Hut comments,
“The cost of a mortgage has a great influence on the housing market as it determines what buyers can pay for a property and is a barometer of the confidence in the financial market. The housing market in 2023 is going to be smaller but the continued decrease in mortgage costs and glimmers of light in the financial markets give hope that we’re on our way to a more “normal” market.”
Are you a first time buyer? Let Survey Hut look at your new property to check for unforeseen defects. Get in contact.
